This is the second time the logistics operator has declared force majeure in as many months. It did so in late July after a cyberattack disrupted operations across the entire company, causing damage to equipment and information.
“This is absolutely catastrophic,” says Dave Watts, maritime and ports consultant with the SA Association of Freight Forwarders. Richards Bay is a critical port for both the export and import of over 30 commodities from magnetite to ferrochrome, woodchips to aluminium and steel.
In addition, on Friday, an agri warehouse caught fire at Maydon Wharf, in the Port of Durban, while the port of Richards Bay was without power all weekend due to a fire at a substation.
Watts articulates what many are thinking. “I can’t tell you the last time that I heard about a fire at Richards Bay. While it’s always a possibility on those conveyor belts, it does not happen easily. And three in three weeks? This makes me think that there is sabotage involved here.”
A mining executive voiced a similar concern: “We have also heard of rail lines in KZN being deliberately damaged. I can’t help thinking we are seeing a low-grade continuation of the recent KZN vandalism that broke out, though there is nothing in the media about it.”
Transnet declared a force majeure at its Richards Bay Bulk Terminal following a fire that broke out on Wednesday 13 October 2021. (Photo: Supplied)
“Richard’s Bay is now horrifically congested with massive delays to most bulk exports,” said the executive, who asked not to be named.
According to Transnet the cause of the fire, which blazed for five hours, is still unknown and a preliminary investigation is currently underway. Expert assessors and investigators are onsite to establish the extent of the damage, the company said in a statement.
The port’s dry bulk commodities are handled via a computer-controlled network of conveyor belts that extend 40 kilometres to seven harbour-bound industries. There has been extensive damage to this network and Transnet has not indicated when it will be working again. In the meantime “the terminal is engaging with its affected customers and is in the process of putting the necessary contingencies in place as some routes are operational,” Transnet said.
Problems at the port have been building all year.
Two weeks ago Richards Bay Port informed customers that it would not be taking any further bookings for its dry bulk terminal until they had cleared the backlog of ships waiting outside the port. At that point 37 ships were waiting offshore, the number has since reduced to 17.
“There is little maintenance and poor planning at the port, partly as a result of the high management turnover,” says Malcolm Hartwell, master mariner, and director of Transport at Norton Rose Fullbright. “Planning is done on the basis that 20 000 tons will be loaded a day – but port operations have never, ever achieved that. Add to this the fact that Transnet has not invested in new equipment or maintenance and the problem compounds.”
Demurrage rates (charged by ships for waiting beyond the stipulated time) are $50 000 a day, resulting in one client having to foot a $1.8-million bill, after keeping a ship waiting for 33 days, he says.
The consequence is not just a financial cost for commodity suppliers or their agents. The end customer, sitting in the US or China, may grow frustrated and cancel the contract, and local suppliers are exploring alternatives like Walvis Bay or Maputo. “The consequence for Transnet is falling revenue, less tax for the fiscus, and fewer jobs for South Africans, but Transnet’s failure to deal with these long outstanding problems suggest they do not care.”
For customers, under contract to deliver to customers, poor service from Transnet — whether the ports of freight rail has already had dire economic consequences.
For instance, while the Richards Bay Coal Terminal (RBCT) has not been affected by the fires, coal exports have also been hampered by Transnet’s mounting woes.
“South Africa’s coal producers, in particular, have had a terrible time, Transnet has already dropped or delayed shipment on over 9 million tons of coal,” said Watts.
For instance, Thungela Resources, the thermal coal exporter that was recently spun out of Anglo American, said in a market update that its third party sales had fallen from 926 kilotonnes in the first half of 2021 to an anticipated 25 kilotons in the second half of 2021.
As a result, the company has been forced to make choices and has prioritised the railing of higher-margin products, at lower volumes, recognising continued rail constraints at Transnet.
The coal industry has assisted Transnet Freight Rail with improved security measures which it hopes will contribute to an improvement in rail performance. This follows several instances of cable theft and related rail interruptions.
Transnet is hardly firing on all cylinders and on Friday issued a SENS announcement regarding the delayed release of its annual financial results, which apparently hinge on it resolving “an irregular expenditure.”
“The irregular expenditure matter has not yet been resolved and Transnet still awaits final feedback from National Treasury and the Auditor General of South Africa. Transnet is confident that it will be in a position to release its annual financial statements, incorporating the outcome of the engagements with National Treasury, by 29 October 2021,” it said.
Richards Bay has also been the scene of social unrest and outright criminality not linked to the riots that swept KZN in July.
Global mining giant Rio Tinto in June declared force majeure on customer contracts at Richards Bay Minerals (RBM) and pulled the plug on the biggest contributor to the KZN economy. This was weeks after RBM General Manager Nico Swart was killed in a hail of bullets.
Richards Bay is becoming a tough place to do business. BM/DM
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How many times above we hear or said things like ‘we don’t want to end up like Zimbabwe’? SA is on track to create a new, horrifying example of a fall from grace unlike anything seen in the modern era. I can only wonder at the ignorance or mental incapacity of those accelerating our nation’s collapse, as it seems they imagine that they will be spared from the civil war and the ravages of neocolonialism that will follow SA’s demise.
This is what a revolution looks like…. destroy a country to nothing, blame those that created wealth/a system/ a Constitution/ and then start all over again with what is considered “level playing fields”
Sadly those that start it all, protect themselves first… then unleash the havoc!
This is what the RET ANC ( aka EFF) faction want…and they will do anything to do it.
Mr Zuma…your limited STD 8 Education has left you vulnerable to the desires of the corrupt. You stupid man, don’t you see that you are a puppet of a much bigger conspiracy! Talk about pieces of silver!
This is the Cambodian option. At Wits in 1986 doing a BEd I was lectured to by Mary Metcalf and Barbara Creecy. They were ANC then and in a discussion they swore that SA would never follow the Cambodia Revolution with Pol Pot which was 10 years before in 1975. Well folks, check the horizon.
Transnet, like Eskom and other taxpayer funded enterprises, is “load shedding”. Not just coal, but real jobs and livelihoods are lost. Morale and customer service? Better get a truck! relying on rail and our ports is like playing the Lotto – loaded to lose.
While their edifice and BBBEE scorecards are impressive, the backbone of our economy and state seem hollowed out by incompetent senior management, with too many chiefs MIA at the tender trough while the roaches carry on as they wish under cover of smoke and fire. Accountability? Zero.
As for the politics? One can only ponder the chilling last line: “This was weeks after RBM General Manager Nico Swart was killed in a hail of bullets.”
State capture, it turns out, is still the only game in town and may not be reversible. In fact, those who claim to ‘investigate’ it, may seek only to cover it up. Time for another Commission of Enquiry, free lunches comrades?
How many mining projects have been approved on the basis of getting commodities to the ports for export and profits have not been forthcoming for Transnet not holding up their part of the bargain. The unemployment grants are being funded from commodity price spikes and if we don’t get the commodities exported then expect fiscal problems and Government reneging.
Sounds like sabotage- the fall from grace of this country and its institutions is quite terrifying! Without the ports South Africa cannot engage in commerce- the people instigating this are no less than indulging in treason and should be treated as such.As the police and law enforcement are quite obviouslyunable or unwilling to engage, private investigators and forensic experts should take over.
Yet another step nearer to anarchy.
And the pace is picking up.
What can be done?
One of the biggest risks to businesses in SA is that all marine imports and exports are in some way governed and throttled by state institutions whose assets have been left to wrack and ruin, poorly thought and purchasing decisions on sub-standard or wrongly specified equipment and all previous engineering knowledge and corporate memory destroyed by cadre deployment.
Transnet and Eskom have won the “Truck Salesman” award for many years-so dysfunctional and poorly maintained are their logistical management, systems and equipment!
Portnet is a disaster-cited as the most inefficient such organisation in the world only last month!
TFR is having to revert to diesel traction due to theft on the electrified lines.
All over staffed, incompetent and corrupt.
And all with hands out for the infrastructure billions-and licking lips at the next round of feeding.
Business has been silent and acquiesced to avoid offence-and bought into the myth of BEE.
Chickens coming home to roost!
Our incompetent ANC will continue to destroy what little is left of our economy until they are replaced.
Regrettably the ignorant, uneducated masses will keep their cadres in office for years to come.
I listened to a very interesting video of rob hersov….. this is purely political sabotage.