Transnet estimates that backlogs and delays in moving shipping containers through its key port in Durban have so far cost it at least R160-million in lost revenue, worsening the already dire financial situation of the state-owned transport group.
At a briefing on Monday, Transnet provided an initial estimate of lost revenue as a result of the critical situation at the Durban port, which is vital for South Africa’s economy as it handles about 60% of the country’s container volumes/traffic. The port facilitates the import and export of vehicles, agricultural goods, minerals and general goods.
Delays and congestion at the port worsened from October, with Transnet blaming adverse weather conditions in Durban for causing its aging port infrastructure (various grades of cranes) to break down even further. Some of these facilities have reached the end of their 15-year life cycle.
Earle Peters, the managing executive of Transnet Port Terminals (the division at Transnet that operates other ports in Richards Bay, Cape Town, Saldanha Bay, Gqeberha, East London and Mossel Bay), stressed that the situation at the port remains fluid and changes daily.
The revenue loss in Durban threatens the financial stability of Transnet’s port operations, which remain profitable (generating a profit of R4-billion during its 2022/23 financial year) — unlike its lossmaking freight rail and engineering divisions.
Containers
The South African Association of Freight Forwarders, an industry body operating at the ports, estimates that nearly 71,000 containers are stuck on ships either in Durban harbour or waiting offshore.
Many of these containers carry goods that retailers hope to sell during the festive season, but time is running out. Some retailers have now resorted to using air freight to get their stock before Christmas.
October was a tough month for Transnet’s operations in Durban — especially at Pier 2 (the country’s busiest container terminal) — as it experienced “exceptionally windy and rainy” weather conditions, resulting in 159 hours of lost operational time. This resulted in more than 20 vessels waiting to enter the harbour, with delays averaging up to 18 days.
Transnet now hopes to clear the backlog by March next year at the latest.
Transnet’s container ports (mainly Durban and Cape Town) are among the world’s worst, scoring in the bottom 10 of the 348 ports ranked in the World Bank’s latest container port performance index.
Transnet ports are rapidly losing market share and investment attractiveness to more efficient operators in other African coastal cities, including Djibouti, Maputo, Somalia and others.
New initiatives
To remedy the situation, various productivity initiatives are being pursued by Transnet, including redirecting vessels to other terminals at Durban port, including Pier 1, whose backlog is starting to ease.
At Pier 1, the plan is to increase the number of containers handled from 1,200 to 1,500 per day by 31 December. At Pier 2, the idea is to ramp up the number of containers handled from 2,500 to 4,000 per day over three months, ending 29 February 2024.
Transnet also plans to increase the productivity of its 7,600-strong port terminal workforce to clear backlogs in Durban by implementing a 12-hour work shift, with employees working four days on and four days off to “ensure fewer breaks and the continuation of work”.
This shift system was implemented on 1 April 2023 at the Pier 1 terminal and will come into effect on 1 December 2023 at the Pier 2 terminal.
To make Transnet ports competitive in the long term, acting group CEO Michelle Phillips said the company would upgrade its port equipment, including ship-to-shore cranes, ship loaders and unloaders, mobile harbour cranes, trailers and haulers.
In doing so, Transnet plans to enter into long-term contracts with original equipment manufacturers (OEMs) – contracts of at least 10 years to “improve reliability and render the equipment more reliable”.
The upgrade of equipment such as cranes started in April this year and will continue until August 2024. Orders for equipment have largely been placed with OEMs.
“If we want the [Durban] port to be operating optimally, we need a new fleet and equipment. Otherwise, it is applying a band-aid on what we have. Now that we have placed the orders, the negotiations with the OEMs are for us to get equipment into the system urgently between 2024 and 2025,” said Phillips. DM