APM Terminals has taken a conciliatory tone after a bruising legal defeat in its high-stakes bid to set aside Transnet’s flagship multibillion-rand private sector participation contract, awarded to rival firm International Container Terminal Services Incorporated (ICTSI).
The Durban high court ruled on Friday that Transnet did not infringe tender rules when it awarded Philippines-based ICTSI a multiyear contract to operate Durban Pier 2 terminal (DCT2).
The court’s decision is not only a boon for ICTSI and Transnet but also a major breakthrough for President Cyril Ramaphosa’s administration’s efforts to bring in the private sector to invest and operate key logistic assets, which have been underperforming for several years.
The main challenge by APM, owned by Danish logistics major Maersk, was that Transnet unduly favoured ICTSI by allowing the latter to use its market capitalisation to calculate its solvency.
The Manila-listed ICTSI, backed by the Philippines’ richest person, Enrique Razon, was the only bidder to use its market capitalisation to calculate its solvency.
No advantage
Judge Mahendra Chetty found that no advantage accrued to ICTSI by virtue of the score recorded in the solvency ranking, as this was essentially a vetting stage to ascertain the responsiveness of the bidders.
“Having regard to all of the facets of the tender and its subsequent investigations into ICTSI’s standing, Transnet was satisfied with ICTSI’s financial status as a long-term business partner, even without it complying with the solvency ratio,” Chetty said in the judgment.
“The tender framework permitted Transnet to condone noncompliance with certain requirements, and it acted accordingly, without prejudice to any losing bidder, especially APM, whose bid was 17% less than that received from ICTSI.
“To have disqualified ICTSI for its failure to achieve a solvency ratio (based on a specified formula) would have been to disqualify a meritorious tenderer and open the way for a significantly lower bid to have prevailed. This would be contrary to the purpose of the tender and the financial objectives of Transnet.”
ICTSI’s R11bn deal for half of DCT2 is R2bn more than that of APM Terminals. DCT2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of SA’s port traffic.
The infrastructure and design of DCT2 have remained the same since 1963. Over the past 20 years, congestion at the terminal due to shipping traffic and limited operational capacity has led to backlogs at the Port of Durban.
To have disqualified ICTSI for its failure to achieve a solvency ratio (based on a specified formula) would have been to disqualify a meritorious tenderer and open the way for a significantly lower bid to have prevailed.
— Judge Mahendra Chetty
APM said it will put the interest of SA’s economy first as it ponders its legal position, which might include a possible appeal.
“While we maintain our position that irregularities occurred during the tendering process, we recognise the importance of operational improvements and infrastructure development in Durban proceeding without further delay. We will therefore take the wider interests of the development of SA port infrastructure into account in determining any possible next steps,” the company said.
The 25-year deal is a flagship public-private sector partnership that will demonstrate how the private sector can work with state-owned enterprises. It is critical to the economy and fiscus that Transnet’s performance improves quickly.
ICTSI regional head Hans-Ole Madsen said the judgment reaffirmed the group’s confidence in the legality of the bidding process.
“We have always believed in the strength of our position, and we are pleased that the court has agreed,” Madsen said.
“The agreement between Transnet and ICTSI will allow significant investment into the skills and infrastructure at the port, to the benefit of SA’s economy,” he said.
“We now stand ready and look forward to working with Transnet at the Durban Container Terminal and the importers and exporters who rely on SA’s busiest container terminal to make a range of operational improvements for the betterment of all stakeholders and the SA economy.”
ICTSI’s business case indicates an intention to spend R1.5bn in capital expenditure and on infrastructure maintenance, equipment, overhaul and refurbishment and new equipment. The total spent by ICTSI over 25 years is R9.4bn.
The contract was interdicted a year ago by the Durban high court, while APM pursued its main application to set aside the deal, in which its bid was ranked second — a matter it has now lost.
The Competition Commission has already recommended that the Competition Tribunal, which has final regulatory say over mergers in SA, approve the deal with conditions. One of these is that the parties must not retrench workers for three years.
Transnet group CEO Michelle Phillips said the judgment “paves the way for us to move expeditiously to finalise the implementation of this transaction without undue delay.”
Update: October 12 2025
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