Transnet has announced a Philippines-based independent terminal operator as partner for upgrade of its flagship Durban container terminal as the group expands private participation in the freight rail sector in a bid to increase competition, boost efficiency and reliability and reduce costs for customers.
The state-owned freight, rail and logistics group yesterday announced International Container Terminal Services Inc (ICTSI) as the preferred bidder for the 25-year joint venture venture with Transnet Port Terminals (TPT) to develop and manage the Durban Container Terminal 2 Pier.
DCT Pier 2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic.
The finalisation of the process follows approvals from the government in terms of the Public Finance Management Act (PFMA).
Transnet Group CEO Portia Derby said the partnership with ICTSI would help reposition the terminal for best practice performance.
Derby said it would ensure growth in volume throughput and would support the terminal in providing operational and commercial support to access global shipping line call routes.
“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port. We are delighted to have a global player of ICTSI’s standing on board to drive this process,” Derby said.
ICTSI is one of the world’s largest independent terminal operators. It operates across six continents, running 34 terminal operations in 20 countries and employing more than 11 000 people.
ICTSI has its headquarters in Manila, Philippines, and is a publicly listed company, traded on the Philippine Stock Exchange and the Over-the-Counter Markets Group in the US.
Eighteen responses were received to Transnet’s initial call for request for interest in August 2021, nine of them from global terminal operators.
Following this, 10 bids were shortlisted in response to a request for qualifications. Of the shortlisted respondents, six bidders submitted proposals.
Derby said this partnership with ICTSI would not only improve the logistics associated with servicing South African ports, but would play a significant part in stimulating exports and imports.
This is a growth strategy for Transnet where Pier 2’s current capacity of 2 million 20-foot equivalent units (TEUs) is planned to increase to 2.8 million TEUs.
She said this was aligned with plans by Transnet National Ports Authority (TNPA) to increase the current container capacity in the Port of Durban from 3.3 million TEUs to an eventual envisaged capacity of 11.4 million TEUs.
“The partnership in Pier 2 is a major step forward for our programme to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth,” Derby said.
According to Transnet, a new company will be formed to manage the operations at DCT Pier 2, in which Transnet will have majority ownership of 50% plus one share.
The term of the transaction is 25 years, with an option to extend to a maximum of 30 years in the event that berth deepening of the North Quay at Pier 2 is delayed.
DCT Pier 2 employees will be seconded to the new entity with no retrenchments, and employees will retain the same terms and conditions before and after the introduction if the private sector partner.
Transnet said it would now proceed to work with the preferred bidder to implement the transaction through the execution of the legal agreements, and ensuring compliance with all legal and regulatory matters.
A way forward on the Ngqura Container Terminal process will be outlined in due course.