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Transnet finalises partnership with Philippines port operator to manage Durban’s Pier 2

Durban’s Pier 2 Landside operations

Posted on March 6, 2024

The board of troubled logistics parastatal Transnet said on Friday that it had approved that Transnet proceedto finalise the contract awarded to Manila-headquartered International Container Terminal Services Inc (ICTSI) following the conclusion of the financial due diligence.

In a statement, it said: “The completion of the financial close is still subject to other non-financial processes, which are currently under way, and set to be concluded without undue delay.”

The Durban Pier 2 is Transnet’s biggest container terminal, handling 72% of throughput from the Port of Durban as well as 46% of South Africa traffic.

“The partnership will have a positive impact on Transnet, container supply chains and on the competitiveness of South Africa’s economy,” the company said.

Transnet said on Friday that, following the selection of ICTSI as the preferred bidder to partner in a 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade the terminal in July 2023, it had completed the due diligence process.

The financial soundness report had confirmed that the port operator had the financial resources to conclude the transaction.

The logistics parastatal said it would seek the consent of all bidders.

“Transnet announced that their board has approved the partnership with the Philippines port operator to manage Pier 2 in Durban. Hopefully this means the contract can finally be signed (and) this could start to improve the efficiency of the harbour,” Stanlib chief economist Kevin Lings said on Friday.

The latest development follows the key appointments last week of Michelle Phillips and Nosipho Maphumulo as CEO and chief financial officer of Transnet, respectively, a move welcomed by business as bringing much-needed certainty to governance issues at the faltering state-owned enterprise.

Transnet is meeting key milestones.

Last week the Cape Town Container Terminal (CTCT) announced that it had exceeded its daily handling target.

This came as the government also announced that an upgrade project at the Cape Town Container Terminal was gathering momentum. The Port of Saldanha is undergoing extension to the multipurpose terminal while there is also further development of berth 205 to cater for rig repairs.

The business sector has been highly critical of the port inefficiencies under Transnet which have been grounding operations. Movement of raw materials and finished products had been impacted, with companies recording subdued business in the half-year to December, mainly as a result of port hold-ups.

But with the Cape Town Container Terminal surpassing its daily targets, there is renewed optimism that reforms being rung in at Transnet are yielding some respite. The Cape Town terminal said on Friday that it had exceeded its daily target of 2 302 twenty-foot equivalent units (TEUs) by 35% following the handling of 3 110 TEUs on February 25.

“This achievement outperformed the terminal’s set stretch target of 3 000 TEUs, which the terminal last exceeded in November 2023,” Transnet said.

Since December, the Cape Town Container Terminal has boosted its workforce by an additional 81 employees to enhance its operations and engineering departments.

Starting this month, the terminal has kick-started a fourth shift system, with employees now working 12-hour cycles per week and enjoying resting periods of four days a week to ensure maximum safety.

“The fourth shift system will alleviate risks associated with excessive overtime working and employees being fatigued, which results in high absenteeism rate. The new shift system also promotes fairness, and healthy balance between employee wellness and operational efficiencies,” said Oscar Borchards, Transnet’s acting managing executive for the Western Cape region.

Meanwhile, the parastatal’s board has now placed Transnet Ports Authority (TNPA) CEO Pepi Silinga and two other managers on suspension over allegations of improperly awarding a fencing tender to associates, with the costs scandalously ballooning from R80 million to more than R300m.

“Transnet will do everything to expedite these investigations, which are being conducted by an independent law firm and a forensic firm. Transnet will take any further action as necessitated by the outcome of the investigations,” it said.

“There is no tangible information about roll-out plans or anything else in the updates they keep releasing. Apparently there’s still some resistance internally to the change,” said economic analyst Sheina Kiyara.


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