After the Bell: Blunder after blunder by Transnet relegates SA to world’s worst port operations

The past few days have been bad for state-owned transport group Transnet.

Two significant, but unrelated, developments point to Transnet’s enormous difficulties with reforming its port operations, which are ranked at the very bottom by the World Bank in terms of global operational efficiency and competitiveness. 

The first development concerns Transnet, which is vexing the port industry by proposing enormous increases in the tariffs it charges customers for moving their goods through eight seaports across SA. At a time when global and more slick ports are slashing port tariffs to remain competitive and attract new customers, Transnet is heading in the opposite direction. It wants to increase tariffs by a cumulative 30% over the next three years.

The second development relates to further delays in the long-awaited process to allow private sector investors to run Transnet ports for a set period while pouring in capital to spruce them up and improve efficiencies. 

This process— first floated by President Cyril Ramaphosa in 2021— has hit a snag and is now being challenged in court. In SA, the wheels of justice turn slowly, meaning that Transnet ports, without private sector intervention, might continue to underperform in 2025 and beyond, holding SA’s economy to ransom.  

Transnet ports are a crucial cog in SA’s economy, with vessels and containers moving in and out of the country carrying goods such as vehicles, fruits, timber and forest products, and mining commodities. When Transnet isn’t operating correctly, many businesses and South African exports suffer.

Bizarrely, Transnet seems to have engineered the two recent developments (the kerfuffle around port tariffs and privatisation delays) and the problems they bring.

The tariff issue is more like self-sabotage by Transnet. 

Transnet National Ports Authority (TNPA), a Transnet division responsible for the functioning of the national port system, has asked the Ports Regulator of South Africa to increase its average tariffs by 7.9% during the 2025/26 financial year.

It wants tariffs hiked by 18.61% in 2026/27 and 2.52% in 2027/28.

If approved by the regulator, the proposed tariff increases would allow the TNPA to generate revenue of R15.6-billion in 2025/26 financial year, R18.7-billion and R19.4-billion for the subsequent two years. 

The National Ports Consultative Committee (NPCC), a body that advises Transport Minister Barbara Creecy on tariffs, has trashed the TNPA for the tariff proposals. In a 35-page letter dated 7 October 2024, the NPCC has described the proposed tariffs as “high”, also warning that they “risk affecting the attractiveness of South African ports by increasing the overall cost for port users and could have a ripple effect on the broader South African economy”.

Because of this, the NPCC has recommended no increase in port tariffs or, if they increase, they should stay within the inflation rate, which was well below 6% at the date of its recommendation to Creecy.

One logistics analyst quipped to Daily Maverick: “You’d think that Transnet National Ports Authority (TNPA) would pull out all the stops to offer incentives to customers by keeping tariffs low. Instead, customers will have to deal with port inefficiencies, persistent equipment failures, labour issues and higher tariffs. This will make it difficult for the TNPA to get new customers and increase container volumes.”

Customers will likely reroute to more efficient ports, including Djibouti, Walvis Bay, Maputo, Beira, and Dar es Salaam, taking market share from SA. 

The TNPA’s tariff increase application already projects lower container volumes. Containers are referred to as 20-foot equivalent units (TEUs), which measure trade volumes at container ports.

The TNPA previously projected that its ports would handle 4.9 million TEUs in 2024/25, which has now been downgraded to 4.4 million TEUs. 

The TNPA has also downgraded TEU projections for the subsequent years until 2028:

• 2025/26 - down from 5 million to 4.6 million;


• 2026/27 - down from 6.7 million to 4.7 million;


• 2027/28 - down from 7.2 million to 4.8 million; and


• 2028/29 - down from 7.3 million to 4.8 million.