Mixed reaction to Durban hub port plans
DURBAN - DURBAN is to be developed as a hub port for the southern hemisphere and Ngqura port in the Eastern Cape as the container terminal of choice.
The plans were announced during President Cyril Ramaphosa’s State of the Nation Address two weeks ago.
Further details are expected to be unveiled by Public Enterprises Minister Pravin Gordhan.
Master mariner and director at Norton Rose Fulbright, Malcolm Hartwell, said the plans would have far-reaching consequences for shipping lines, logistics companies and, ultimately, consumers.
Hartwell said there was no doubt Durban had faced challenges in providing the discharge and transport answers to the massive growth in container traffic on the Gauteng-to-Durban corridor.
“Port and rail inefficiencies have led to massive congestion and delays. This has seen the move of container traffic from rail to road which has resulted in congestion at various choke points as well as damage to the road infrastructure.
“In response, the Durban port authority and eThekwini Municipality have invested heavily in infrastructure and container-handling equipment and explored a number of mechanisms to relieve congestion.
“This includes the upgrading of the N3 highway, various interchanges and the approaches to the port, the possibility of a new Durban dig-out port and the mooted high-speed rail link to Gauteng.”
Hartwell said Gauteng, the economic hub of South Africa, was from a logistics perspective, best served by the ports of KZN.
“The consumer and our economy are best served by having to transport containers 600km rather than 1 100km.
“Durban’s geographical advantage has seen massive investment by the state and private companies in the N3 corridor and in the industries that support the port, shipping lines and logistics companies.
“The Eastern Cape is underdeveloped and the government is to be praised for seeking to alleviate the poverty in that region by developing Ngqura.
“Whether the decision to develop Ngqura will result in increased efficiencies has yet to be seen.”
Hartwell said important ancillary issues that should be considered included that trucking companies would not be in a position to offer the same rate to transport a container from Ngqura as they are to transport containers from Durban and that cost would have to be passed on to the consumer.
In addition the government’s draft policy on shipping requires all coastwise traffic to be carried by South African-registered ships, he said.
“If this becomes a reality then any containers being fed to or from Ngqura and Durban will have to be carried by South African-registered ships. Shipowners left the South African flag for market reasons and if they are to be compelled to return in order to feed Ngqura those additional costs will also be passed on to the consumer.”
Hartwell said shipping and logistics were almost purely market-driven.
“This has seen the massive investment in the Gauteng corridor and KZN and the industries that support the existing traffic between Gauteng and Durban.
“Those service providers do not currently exist in the Eastern Cape and the private sector will only be encouraged to invest in the proposed plans if it is seen to be a benefit to them and, ultimately, the consumers that they service.
“The businesses that have already invested and are planning to invest further in the N3 corridor will have to review all of their plans and there is no doubt that the government’s plans will have a negative effect on the economies of Durban and KZN.
“The vast majority of valuable product is carried in containers.
“How Durban is to develop as the southern hemisphere’s leading hub terminal when container traffic is to be diverted to Ngqura is simply not clear. The reality is that Durban remains, for a host of reasons, the ideal port to become the feeder port for sub-Saharan Africa, but if it is deprived of its revenue as the leading container port, it will have difficulty in attracting public and private investment in its plans to develop further.”
The Durban Chamber of Commerce and Industry called for an improvement of efficiencies and competitiveness of the port of Durban.
“The chamber notes the president’s remarks to reposition Durban as a hub port for the southern hemisphere.
“While this sounds promising, we believe that there is an urgent need to attend to port security, operational inefficiencies and the competitiveness of the port,” said chamber president Nigel Ward.
Ward said, however, the recent decision to relocate the Transnet National Ports Authority head office to the Eastern Cape’s (eMendi) building did not appear to support the president’s remarks.
“We are dismayed to learn that the container terminal is now to be moved to Ngqura port.
“This opens up great risk for KwaZulu-Natal’s investment profile,” Ward said.
Transnet said it was not ready to comment, but the parastatal recently defended the move of its TNPA head office, which is split between Durban and Joburg, saying it made good business sense since there was already a R255 million eMendi building in the Eastern Cape, completed in 2017.
Peter Besnard, the chief executive of the South African Association of Ship Operators and Agents, which represents Ship Operators and Vessel Agents, said he believed the plans in terms of port restructuring were ill advised.
But economist Prof Irshad Kaseeram, of the University of Zululand’s economics department, was positive, saying the idea would make Durban a major economic zone in the southern African region.
“Hub ports have the latest technology and operate in concert with other ports around the country and indeed with ports of other neighbouring countries similar to the Singapore Hub,” Kaseeram said.
“Hence Durban harbour will work in concert with PE Harbour, thus huge carriers will dock at the Hub Port and then off-load on to smaller vessels
that will transport to other ports, hence PE’s eMendi’s infrastructure will be optimally utilised as a container storage zone.
“This type of holistic operation will bring down overall costs and operating times, thus making us a favoured destination to handle cargo destined for the entire southern African region from Angola to Kenya and all the ports along this U-shaped subregion,” he said.
Kaseeran understood a hub port to translate into a large-scale development comprising multiple systems, main and rear cargo storage zones and sophisticated shore cranes.
“Typically a hub port is connected to many industrial zones and possesses the necessary rail and road infrastructure linkages to other industrial complexes.”