November 10, 2024

SAAFF calls for enhanced private sector involvement and reforms in SA’s port operations

In the aftermath of the recent High Court judgement on the Durban Container Terminal (DCT) Pier 2, the Southern African Association of Freight Forwarders (SAAFF) underscores the pivotal role of robust private sector participation in South Africa’s logistics network.

The judgement, which halted the contract between Transnet and International Container Terminal Services Inc., is a serious moment to contemplate the future of South Africa’s port operations. While the court’s decision raises significant procedural issues, SAAFF sees this as a crucial opportunity to revamp and fortify the frameworks for private sector investment and inter-port competition, which can revolutionise our ports.

Private sector participation: A key to modernising SA’s logistics network

The Durban Port, which has long suffered from inefficiencies and operational delays, represents the broader challenges facing South Africa’s logistics infrastructure. SAAFF asserts that the inclusion of experienced private sector partners, like those involved in the bidding process for DCT Pier 2, can play a crucial role in addressing these challenges.

The court’s ruling highlights the importance of transparency and fairness in selecting private partners, but it should not deter the progress toward greater private involvement. On the contrary, the urgency for private sector expertise to co-manage, invest and modernise our ports has never been more apparent.

Transnet’s initiatives to attract equity partners are a step in the right direction. However, SAAFF urges the process to be more transparent and inclusive, focusing on attracting global players that can contribute financially through technology, skills transfer and operational know-how. Successful private sector participation can lead to quicker improvements in terminal productivity, reduced ship turnaround times and better service delivery to local and international traders.

Inter- and intra-port competition: Driving efficiency and growth

South Africa’s ports operate in an environment that lacks meaningful competition between ports and within individual port terminals. This lack of competitive pressure has led to complacency and inefficiencies that have compounded operational challenges.

To break this cycle, SAAFF advocates establishing inter-port and intra-port competition frameworks. By fostering competition among terminals and between ports, operational efficiencies can be improved, costs can be reduced and service standards can be elevated across the board.

A model where different operators manage different terminals within the same port or where different ports compete for similar cargo will ultimately benefit the entire logistics value chain. This competition would encourage all players to innovate, invest in better technologies and improve their performance to stay relevant in a competitive landscape.

Efficiency and productivity: The cornerstones of economic growth

One key objective of bringing in private partners is to address the well-documented inefficiencies at South Africa’s container terminals. The recent delays at Durban’s terminals are symptomatic of the need for a complete overhaul of operational processes backed by strategic investments.

SAAFF believes that through collaboration between public and private stakeholders, efficiency and productivity at container terminals can be improved significantly. Based on global best practices and accompanying international literature on container terminal operations, these enhancements will reduce dwell times, alleviate congestion, improve port efficiency and ensure South Africa’s ports can meet international standards.

Improving port efficiency is not just a logistical imperative but a national economic one. Efficient ports are the gateway to international trade and are essential for boosting export competitiveness, attracting foreign investment and generating jobs in related industries.

Investment in ports: A catalyst for job creation and economic development

SAAFF acknowledges Transnet’s financial pressures, but strongly believes attracting private investment into the ports should be viewed as a priority to unlock the full potential of South Africa’s trade corridors. Investment in infrastructure, technology and human resources will not only bring our ports up to international standards but will also act as a catalyst for job creation and economic growth.

When ports function optimally, they can drive the development of other sectors including manufacturing, retail and agriculture, by providing efficient and reliable access to global markets. The DCT Pier 2 transaction is crucial to this broader goal. While the legal process must unfold, SAAFF urges all parties to expedite efforts to finalise the transaction in the economy’s best interest.

Conclusion

South Africa occupies a critical position along global maritime trade routes, yet it continues to lose relevance and market share in international trade and transshipment due to persistent inefficiencies in its ports. Each day, these inefficiencies remain unaddressed, and South Africa’s competitiveness in the global cargo movement arena diminishes further.

SAAFF remains committed to working with both Transnet and other stakeholders to find a solution that ensures the participation of the private sector, enhances competition and drives productivity within our ports.

As the logistics industry continues to grapple with significant operational challenges, the future success of our ports will depend on our ability to attract investment, increase efficiency and foster competitive practices.

Jacob van Rensburg

Head: Research and Development

SAAFF

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