S.Africa’s Terrible Ports: ports underscores long haul to fix key logistics operations and infrastructure
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The ports in Cape Town and Ngqura (in the Eastern Cape) were the world’s worst performing and least competitive in 2023, ranking 405th and 404th, respectively. A total of 405 ports were assessed in the US, Canada, the Middle East, Asia, Australia, New Zealand, the Pacific Islands, Europe, Central and South America, the Caribbean Region and Africa.
South Africa’s ports, operated by state-owned transport group Transnet, are in the spotlight once again for all the wrong reasons. They have been ranked at the very bottom in terms of global operational efficiency and competitiveness.
This is yet another indication that the recovery of Transnet’s logistics operations is set to be a long haul after being hobbled by years of negligence, lack of maintenance and corruption.
Using data from 2023, the World Bank and S&P Global Market Intelligence tracked the performance of 405 ports in the US, Canada, Central and South America, the Middle East, Asia, Australia, New Zealand, the Pacific Islands, Europe, the Caribbean and Africa.
These ports were ranked in terms of efficiency through the Global Container Port Performance Index. The measure of efficiency looked at capacity or space utilisation at port terminals, costs paid by customers to move their goods through ports, and container loading and waiting times.
Ports in South Africa have been found seriously wanting as they ranked at the very bottom of the index.
The ports in Cape Town and Ngqura (in the Eastern Cape) were the worst performing and least competitive in 2023, ranking 405th and 404th, respectively. In other words, these two ports were ranked last and second-last out of the 405 that were assessed.
The Port of Durban, South Africa’s largest and busiest (handling 60% of the country’s container volumes), was ranked 399th.
Durban’s port is important for the economy as it lies on international shipping routes between the East and West. The port is also linked by rail and road infrastructure to Gauteng and extends to other major trade corridors.
The highest-ranked South African port on the index was that of Port Elizabeth (now Gqeberha), which was ranked 391st. However, the port remains near the bottom of the list.
In 2022, at least 348 ports were ranked on the index. At the time, Cape Town still did poorly in the 344th position, with Gqeberha ranked 291st and Durban 341st.
A well-functioning port system is a crucial cog in any country’s economy.
Transnet’s ports are responsible for moving steel, agricultural and automotive goods, among others, that are produced in South Africa and exported around the world.
When Transnet is dysfunctional, businesses in South Africa operate inefficiently and the country’s exports suffer in the process.
Well-run ports are also important for Transnet to attract global customers that would land their goods in the country. After all, more than 80% of global merchandise trade (by volume) is transported via sea routes.
However, Transnet’s financial and operational problems have meant that it has neglected investments in its ports to improve them, resulting in global logistics companies choosing more efficient ports in other parts of Africa to offload their cargo.
Read more in Daily Maverick: Transnet’s critical operation and financial situation extends from bad to worse
The Somali ports of Berbera and Mogadishu were ranked 103rd and 176th, respectively.
The Port of Conakry in Guinea came in at 208th.
Industry response
Transnet customers are not surprised that the state-owned entity’s ports are lagging in terms of efficiency. The agricultural industry, for instance, relies on Transnet’s port in Cape Town to export harvested fruits.
Tru-Cape Fruit, the largest apple and pear exporter in South Africa, accounts for about 20% of national exports.
Roelf Pienaar, the managing director of Tru-Cape Fruit, said the poor ranking of Transnet ports is worrying because their inefficiencies “should be considered a significant barrier to trade”.
“An efficient and resilient port is key to the success of our industry,” said Pienaar, adding that Tru-Cape Fruit was only midway through the current season’s exports.
Towards the end of 2023, the fruit industry bore the brunt of inefficiencies at the port in Cape Town. The facility is crippled by ageing infrastructure, lack of equipment and low productivity levels.
The port’s terminals were congested last year, causing a slow and costly start to the deciduous fruit season, which normally runs from November to March and provides an important boost to South Africa’s economy.
However, the backlog of vessels resulted in a more than 10% decrease in fruit export volumes – billions of rands were lost.
The City of Cape Town has responded to the port’s poor ranking, saying that “the inefficiencies at our port not only impede the flow of goods but also significantly hamper our economic growth”.
Transnet is a responsibility of the national government.
“The port is a crucial nexus for the products and services of the private sector, and its performance directly impacts our economy,” James Vos, the Mayco member for economic growth, said in a statement.
He said the ball is in Transnet’s court to partner with private sector players to invest in the port to boost its performance. Transnet is already working with the private sector in some areas, including at its port in Durban.
Read more in Daily Maverick: Philippine logistics firm to the rescue: Transnet embraces private sector as partner for delivery
Transnet has started the process of selecting private sector players to upgrade and operate container terminals at ports over long periods (up to 25 years).
Although Transnet is not relinquishing full control of its ports, or embracing a privatisation model, its request for help is a tacit admission that it can no longer do the job alone.
Transnet is also in the process of replicating this private sector participation model at the Ngqura container terminal in the Eastern Cape and at the Richards Bay port in KwaZulu-Natal.
The state-owned enterprise (SOE) is expected to implement similar arrangements at its 13 other terminals at ports including Cape Town, Saldanha Bay, Gqeberha, East London and Mossel Bay.
To make Transnet ports more competitive in the interim, the SOE’s group CEO Michelle Phillips said in a recent media briefing that the company plans to upgrade its port equipment, including ship-to-shore cranes, ship loaders and unloaders, mobile harbour cranes, trailers and haulers.
This would be done at problem ports in Cape Town and Durban.
Read more in Daily Maverick: Transnet’s financial crunch intensifies after losing millions in revenue due to Durban port inefficiencies
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 last year and will continue until August 2024. Orders for equipment have largely been placed with OEMs. DM
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