Transnet calls for private sector support in funding South Africa’s logistics infrastructure

Transnet cannot foot the entire R400-billion bill for logistics infrastructure alone.

At least 25% should come from the private sector, which has sufficient funds “sitting and being lazy” on its balance sheets,Transnet CE Siyabonga Gama told delegates at the eThekwini Maritime Cluster’s annual maritime summit, in Durban, on Monday.

During a presentation that followed an overview of the draft comprehensive maritime policy, Gama warned against having “too many balls in the air” when it came to formulating policies for the transport sector.

Instead, he called for an integrated planning and development framework and an effective overarching policy that would ensure the alignment of various nodal policies. 

Addressing Transnet’s infrastructure programme, he stressed that the parastatal played a key role in reducing the cost of doing business in South Africa. 

Addressing critics of high port costs, he warned that it was dangerous to make such claims without context and appropriate benchmarks.

Gama said it was unfair to compare Transnet to port operators in other countries where marine infrastructure was subsidised by government. Unlike Transnet, these operators were expected to provide just berths and the superstructure required for their operations. 

He also noted that there were no complaints about high costs when it came to the bulk goods such as coal, iron-ore and manganese where Transnet offered a particularly cost effective service.

“There is also a notion that our port operators are inefficient. Nothing could be further from the truth,” he said.

Referring to the World Bank Global Logistics Competitiveness Report, Gama said South Africa was ranked twentieth, ahead of European countries such as Italy, as well as Brazil, Russia, India and China.

This was a product of the Transnet Market Demand Strategy, as well as consultation and cooperation between the public and private sectors. 

Gama pointed out that, when it came to infrastructural development, maritime connectivity was critical.

He noted that container lines were attracted to countries offering high volumes which created the required economies of scale. As such, Transnet was ensuring that South African ports – especially Durban and Ngqura – had the channels and berths to handle “the A380s of the shipping world”.

He added that, to service these large vessels, reliability, productivity, efficiency, speed and simplicity were needed. High-quality infrastructure will ensure Transnet is competitive and competent to handle these large ships.

Gama said Transnet was on a quest to drive transformation into a hub and spoke model for quick ship turnarounds. Central to this was improving port and rail integration.

He said that it was important not to focus just on port investments. Every intervention must talk to the entire ecosystem. 

Examples of Transnet’s interventions include providing road and rail users with alternative drop-off and collection points to help clear stack areas; introducing a traffic management system to improve real-time communication between ships, transporters and other stakeholders; creating an operations centre for containers which will assist in supporting intermodal terminal development and integrating port rail terminals with container terminals; and providing the track and trace capabilities required to make sure ports are transparent.

When it came to Operation Phakisa, Gama said Transnet had committed to spending at least R65-billion on port infrastructure over the next seven years. He reiterated the need for the private sector to participate, especially when it came to ship repair, as Transnet was not “married to” the idea of being the only provider of these services as in the past.

Port investments would include deepening berths at Maydon Wharf and the investment in mobile shiploaders, as well as expansion to break bulk facilities in Ngqura, Richards Bay and Saldanha. There were also plans to deepen berths at the Durban Container Terminal and increase container facilities via the proposed Salisbury Island Infill. 

Overall, Transnet also planned to replace straddle carriers in Durban and extend the car terminal. This, along with improvements in container handling, would support government’s strategy to fast-track the growth of the automotive industry, he said.

There are also plans to extend the breakwater quay and deepen berths at the Durban small craft harbour.

Gama concluded that Transnet would continue to try and increase infrastructure spend and would continue with its countercyclical investment strategy. This had helped stop South Africa from falling into recession and had helped lift its sovereign credit rating, preventing it from being allocated junk status.