The Western Cape provincial government is sounding loud warning noises about the escalating dysfunction at the Port of Cape Town. So too is Fruit SA, an umbrella body for fresh fruit producers and exporters.
The Western Cape government this week pointed out that just about all the performance indicators at the port are far short of targets in the first half of October.
Going into peak export season, delays in getting fruit to global markets have seen claims of bad-quality produce double to 37% over seven years, according to data from Fruit SA.
The Western Cape accounts for more than half of SA’s agricultural exports, and the province’s exports have grown by more than 200% in the past decade. The province aims to boost exports further, creating more jobs in SA’s agricultural sector. But Transnet’s inability to run its ports efficiently is holding it back.
The warnings from the Western Cape are a reminder that Transnet’s dysfunction is not just in its rail network, but also at its ports. They are a reminder too that while huge mining exports have been lost, we should also be worrying about the lost fruit and other agricultural and manufactured exports. Nor is it just lost exports that weigh on growth: imports of the inputs and equipment needed are also not arriving on time, if at all.
Stellenbosch University professor Jan Havenga and his colleagues have calculated the direct cost to the economy of the underperformance at Transnet’s ports jumped by more than 40% to R15.5bn over the past three years; the indirect, induced cost almost doubled over that period, to R35bn.
Fixing Transnet’s management and turning around its port operations is crucial, and urgent. So too is getting competition into the sector to drive efficiencies — in line with the government’s policy on SA’s ports. The state is set on ensuring it continues to own the ports, with the National Ports Authority as the landlord. But it has promised to bring competition into operating the port terminals. This is one area that already has private sector players. Though Transnet has a monopoly on container and automotive port terminals, Grindrod and Bidvest operate specialist freight terminals at the ports, as does the Richards Bay Coal Terminal. There’s no reason other terminals should not be concessioned out. The new government logistics road map says they should.
But the policy thrust needs to be much more aggressively and speedily enforced. There was great fanfare in July when Transnet chose a global Philippines-based container terminal operator to take over Durban Pier 2 container terminal’s operations, through which almost half of SA’s freight is shipped. But now Transnet says it will sign that contract only after April 2024.
Reasons for the long delay are unclear. But they highlight yet again that introducing competition and efficiency into SA’s ports cannot be left to a reluctant Transnet. The government needs to fast-track those road-map reforms.
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