Business Maverick

SOE SOS

Transnet’s financial crunch intensifies after losing millions in revenue due to Durban port inefficiencies

Transnet’s financial crunch intensifies after losing millions in revenue due to Durban port inefficiencies
From left: A crane operator loads a shipping container on to a truck at the Port of Durban, operated by Transnet in Durban, South Africa, on 28 October 2015. (Photo: Kevin Sutherland / Bloomberg via Getty Images) | Shelley Christians | Gantry cranes sit above a ship in the container terminal at the Port of Durban, operated by Transnet on 28 October 2015. (Photo: Kevin Sutherland / Bloomberg via Getty Images)

Delays and congestion at the biggest port on South Africa’s east coast worsened from October this year, with Transnet blaming adverse weather conditions that contributed to its ageing port facilities deteriorating even further.

Transnet estimates that backlogs and delays in moving shipping containers through its key port in Durban have so far cost it at least R160-million in lost revenue, worsening the already dire financial situation of the state-owned transport group. 

At a briefing on Monday, Transnet provided an initial estimate of lost revenue as a result of the critical situation at the Durban port, which is vital for South Africa’s economy as it handles about 60% of the country’s container volumes/traffic. The port facilitates the import and export of vehicles, agricultural goods, minerals and general goods. 

Delays and congestion at the port worsened from October, with Transnet blaming adverse weather conditions in Durban for causing its aging port infrastructure (various grades of cranes) to break down even further. Some of these facilities have reached the end of their 15-year life cycle.

Earle Peters, the managing executive of Transnet Port Terminals (the division at Transnet that operates other ports in Richards Bay, Cape Town, Saldanha Bay, Gqeberha, East London and Mossel Bay), stressed that the situation at the port remains fluid and changes daily. 

The revenue loss in Durban threatens the financial stability of Transnet’s port operations, which remain profitable (generating a profit of R4-billion during its 2022/23 financial year) — unlike its lossmaking freight rail and engineering divisions.

Containers

The South African Association of Freight Forwarders, an industry body operating at the ports, estimates that nearly 71,000 containers are stuck on ships either in Durban harbour or waiting offshore.

Many of these containers carry goods that retailers hope to sell during the festive season, but time is running out. Some retailers have now resorted to using air freight to get their stock before Christmas.

October was a tough month for Transnet’s operations in Durban — especially at Pier 2 (the country’s busiest container terminal) — as it experienced “exceptionally windy and rainy” weather conditions, resulting in 159 hours of lost operational time. This resulted in more than 20 vessels waiting to enter the harbour, with delays averaging up to 18 days.

Transnet now hopes to clear the backlog by March next year at the latest.

Transnet’s container ports (mainly Durban and Cape Town) are among the world’s worst, scoring in the bottom 10 of the 348 ports ranked in the World Bank’s latest container port performance index. 

Transnet ports are rapidly losing market share and investment attractiveness to more efficient operators in other African coastal cities, including Djibouti, Maputo, Somalia and others.

New initiatives

To remedy the situation, various productivity initiatives are being pursued by Transnet, including redirecting vessels to other terminals at Durban port, including Pier 1, whose backlog is starting to ease. 

At Pier 1, the plan is to increase the number of containers handled from 1,200 to 1,500 per day by 31 December. At Pier 2, the idea is to ramp up the number of containers handled from 2,500 to 4,000 per day over three months, ending 29 February 2024. 

Transnet also plans to increase the productivity of its 7,600-strong port terminal workforce to clear backlogs in Durban by implementing a 12-hour work shift, with employees working four days on and four days off to “ensure fewer breaks and the continuation of work”.

This shift system was implemented on 1 April 2023 at the Pier 1 terminal and will come into effect on 1 December 2023 at the Pier 2 terminal.

To make Transnet ports competitive in the long term, acting group CEO Michelle Phillips said the company would upgrade its port equipment, including ship-to-shore cranes, ship loaders and unloaders, mobile harbour cranes, trailers and haulers. 

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 this year and will continue until August 2024. Orders for equipment have largely been placed with OEMs. 

“If we want the [Durban] port to be operating optimally, we need a new fleet and equipment. Otherwise, it is applying a band-aid on what we have. Now that we have placed the orders, the negotiations with the OEMs are for us to get equipment into the system urgently between 2024 and 2025,” said Phillips. DM

Gallery

Comments - Please in order to comment.

  • Fanie Rajesh Ngabiso says:

    Privatize.

    Love it or hate it, it is South Africa’s only hope.

    Which also makes it the only long term hope for our working brothers.

  • Manny Teixeira says:

    When anc appointed Brian molefes wife as ceo and she retrenched the railway and locomotive workforce then these things gs happen. She was quite proud of the fact the she created to demand for road transport. She is more qualified to loot and has no clue how to run an entity like transnet.

    • Winston Bigsby says:

      And BM & Anoj Singh went to Eskom & repeated the same trick. JZ’s girlfriend running SAA? Aaron Motsoaledi the chief wrecking ball, Life Esidemeni to Dept of Home Affairs? His successors resigning and one off to repeat at Telkom? Its like a reward, stuff this up and move to another SOE for 4 years, go to lunch. Repeat. The gravy train is broken tho..
      We put a world class Track & Trace system into Transnet Freight Rail in the late 90’s, they were winning prizes overseas. They switched it off. Thus the demand for road freight which they can’t handle now. Like putting kids in charge a sweet shop. Now everyone is fat, lazy & sick. And the sweets have run out coz we ate them rather than sold them. And we can’t get more as the power is off. And we don’t have money to pay the suppliers. Eish! Can’t believe it. Even me!

  • Brian Cotter says:

    And the new Durban Port operator contract?
    Somewhere I read this would only be placed at end of financial year, end March 2024?

  • Denis Vaden says:

    Why do we always have to wait for things to be completely broken before we take any action? Every time.

  • Vincent Britz says:

    Another failure from our corrupt ANC government that keeps on stealing & looting everything they can lay there hands on.. And then it’s still not enough for the corrupt ANC government that their CEO’s of state company’s that they have destroyed
    can just resign and get another job as a CEO of a different state owned company!!!!

    The ANC corrupt government must fall or we are all doomed to life of crime and poverty.

  • David Katz says:

    While our economy being choked to death in Durban, our parliament spent its day on voting on breaking diplomatic ties with Israel and other matters involving Gaza.

    Talk about confused priorities. Our incompetent government should spend more time worrying about its own citizens. We cannot save the world, if we cannot save ourselves.

    • David Mitchley says:

      All they are good for is generating hot air.
      Talk is cheap, actually doing something means someone has to do some work – heaven forbid that we ask a SOE “employee” to do actually earn their bloated salary.

  • Prav Tulsi says:

    Whats new?

  • Mark Penwarden says:

    The one thing our national government is unable to do is blame itself. Weather, foreign governments, apartheid, other political parties, the private sector …

  • spook.southey says:

    A question. If the current backlog is cleared by next year, what about the continuing arrival of container ships off shore? I see all these ships from our flat, they are ever piling up. Maybe I’m don’t understand Port logic!

  • Henry Coppens says:

    Blaming adverse weather? I thought blaming apartheid would have been the preferred excuse. But funny how the port ran quite well, bar a few non weather related hiccoughs, through all kinds of weather since the late 1800’s. Surely by now we would have known how to accommodate the vagaries of the weather. The rest of the world has. Oops! sorry, I forget! This is the ANC cadres (not) at work.

  • Sven Coles says:

    What a pitiful state of affairs.
    As if SA can afford to lose more income. To expect ships to wait for up to 18 days outside the port is outrageous and impacts severely on the shipping companies’ ability to maintain their schedules and profitability.
    They will eventually choose other ports to do business with and SA will lose further income.
    This is a disgrace.

  • Dave Alston says:

    Do you really think they are worried about losing that money ??

  • Grumpy Old Man says:

    Sorry, does anyone know a proximate answer to the following?
    Considering our cost of debt has trippled since 2009. How much exactly have we borrowed & how was this spent?
    Part of the answer (a large part in fact) was on bailing out underperforming SOE’s (which continued to under-perform), we built some white elephant football stadiums & a couple of power stations (which are arguably still incomplete) & the rest was just wasted, I guess?
    You just gotta consider the money lost cos of loadshedding, cos our railways & ports don’t work – the consequence of this in terms of unemployment & yet the ANC still wants to argue the virtues of Cadre deployment & insist they have a good story to tell!

  • Confused Citizen says:

    Funny how these caders and the top management they appointed have never heard of the concepts of maintenance and replacement of capital equipment. Yet the Department of Labour expects all large private sector companies to appoint more of these incompetent people to top management positions until they represent 89% (on penalty of huge fines). So the ANC wrecked SOE and they want to do the same to the private sector which is still keeping this country afloat. It baffles the mind.

    • Winston Bigsby says:

      Like Cyril’s call on teachers to become involved in decolonisation of education. Like it’s not bad enough?
      But let’s concentrate on Gaza, it’s easier..

  • Jimbo Smith says:

    Ironic! Or maybe, moronic a better term! Maputo Harbour now very efficient due to Govt. handing over management to a private enterprise ( no surprise, a SA Company). While our ports sink ever deep, one CEO after the other thinks and believes their most important task is to tell us long suffering citizens what we already know viz you have stuffed up yet another once efficient entity. Tragic! Treasonous!

  • Jimbo Smith says:

    Acting Group CEO Michelle Phillips…yet another as the revolving door keeps spinning. Key question; what is her skills set, industry experience and track record? In other words, has the right person for this crucial job been appointed? Would love to know!!!

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

A South African Hero: You

There’s a 99.7% chance that this isn’t for you. Only 0.3% of our readers have responded to this call for action.

Those 0.3% of our readers are our hidden heroes, who are fuelling our work and impacting the lives of every South African in doing so. They’re the people who contribute to keep Daily Maverick free for all, including you.

The equation is quite simple: the more members we have, the more reporting and investigations we can do, and the greater the impact on the country.

Be part of that 0.3%. Be a Maverick. Be a Maverick Insider.

Support Daily Maverick→
Payment options

MavericKids vol 3

How can a child learn to read if they don't have a book?

81% of South African children aged 10 can't read for meaning. You can help by pre-ordering a copy of MavericKids.

For every copy sold we will donate a copy to Gift of The Givers for children in need of reading support.