Rome is burning, Transnet acting CEO Michelle Phillips said on Monday. She was describing the crisis at the Durban port, where more than 60 vessels are waiting at anchor, with tens of thousands of containers stuck at sea and the backlog expected to take months to clear.
Now it is imports that are embroiled in the logistics crisis, with retailers such as Woolworths, Pick n Pay and Shoprite facing challenges in getting their goods on time for the festive season, and industrial companies facing setbacks in receiving vital imports of spares and equipment.
That adds to the export crisis that the failures at Transnet’s freight rail and port services have brought on the economy, with fruit exporters unable to get their product to market in time to prevent them going bad, and bulk commodity exporters losing out on key markets. The cost in terms of economic growth has been enormous. And there is little sign of progress despite the president setting up his National Logistics Crisis Committee earlier in 2023 and business investing significant time and resources to try to help.
At least former Transnet CEO Portia Derby is now gone and the highly regarded Phillips is sending the right signals. The disastrous state of the Port of Durban reflects a lack of maintenance and investment in infrastructure, which has resulted in old equipment being unable to cope with adverse weather. Phillips pointed out, however, that plans to invest in 2021 were simply not implemented. And encouragingly, she seems to be focusing on turning around operations and execution at the ports as soon as possible — on management in other words, rather than the usual pleas for more money. “Our focus needs to be on the productivity and turnaround time of the vessels. That is the only way we are going to reduce congestion,” she was reported as saying on Monday.
To the extent that the crisis at the ports (and on rail) is indeed a management problem, it should be able to be addressed relatively quickly — as long as the right appointments are made and government allows management the space to act. Better productivity in the short term would also help to address Transnet’s financial woes, by ensuring more revenue.
But the ports and the railways need significant investment in infrastructure, and they need to become hugely more efficient. There is no alternative to bringing in private sector concessionaires and partners that can put up the capital and bring the expertise. Transnet is taking a deplorably long time to sign with the Philippines-based global operator it has chosen as its partner at Pier 2 of its Durban container port. And while the government claims to be committed to bringing in the private sector, efforts have been slow and timid — and ambitions are limited.
There seem to be no plans to consider private operators at the level where Durban is failing so horribly — the port operator itself, which has the task of bringing the ships into the harbour and providing the infrastructure for the harbour itself. There, Transnet National Port Terminals (TNPT) retains its monopoly. And while TNPA has been corporatised and a new board appointed, there’s surely a case to look at introducing private capital and competence to turn that entity around too.
Correction, November 22 2023: This article has been updated to reflect that retailers are experiencing delays and disruptions in their imports of goods for the festive season in the second paragraph.
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