Durban’s transformation into smart port city aimed to improve efficiencies

24th February 2016

By: Shirley le Guern

Creamer Media Correspondent

  

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The notion of transforming Durban – home to South Africa’s largest and busiest ports – into a smart port city was a focal point at the inaugural Durban Maritime Summit, which kicked off in Durban on Wednesday.

The summit aimed to pave the way for the port and the city to work together to improve efficiencies and remove constrictions within the port pipeline.

Addressing conference delegates, University of KwaZulu-Natal Maritime Studies unit director Trevor Jones intimated that the development of a smart port could help alleviate the general perception that the Port of Durban was a high-cost port for users.

He said the concept of a “full service” port system that served all port users was key. This hinged on the availability and quality of port functions, the efficiency of those functions, their cohesion and interconnectedness, and the delivery of these services at a competitive cost.

Jones added that, while the port was handling fewer vessels, these were bigger both in terms of tonnage and when it came to the length and beam of the ships. This, compounded by the issue of ports working more cargo per call, presented several challenges.

He noted that Durban had “reasonable” marine services and “reasonably modest” port dues.

Further, developing Durban as a ship repair centre was key to a full-service port – even though this was an area of concern for Durban, as ship repair created massive backward linkages into the port cluster.

However, Jones highlighted that there was a comprehensive mismatch between repair and vessel caller dimensions, adding that the ship repair facilities were therefore underused and poorly managed, which was “anything but smart”.

He noted that ship repair was a particular focus of Operation Phakisa, which aimed to unlock of opportunities within South Africa’s blue economy, adding that the emphasis had to be shifted from focusing only on the Port of Durban to include Richards Bay.

He said stakeholders needed to look at floating dock opportunities, although floating docks were large and could be problematic when it came to positioning. The issue of how these docks would be managed – and by whom – and whether this would fall outside the ambit of State-owned Transnet National Ports Authority (TNPA) would also need to addressed.

Looking at Durban as a bunker supply centre, Jones noted that the port had a good history. This legacy could continue given that Durban had local, albeit ageing, refinery capacity. Even if limited fuel grades were available, this was mitigated by price advantages, with Durban able to supply slightly more refined fuel grades at a lower price than many competitors who were able to supply lower-grade fuels.

Jones told summit delegates that, while Durban was already receiving business from “pure bunker callers”, there was a substantial “footloose” market that bypassed the port and could offer opportunities. Exploiting this could result in strategic windfall gains for the port and the port cluster.

Returning to the issue of the cost of doing business in Durban, Jones acknowledged that South African marine charges were below global averages. However, cargo owners reported that their costs were above the global average.

One of the main problems was that there was no uniformity, with cargo dues massively high for containers and automotive products and lower for major bulk cargoes. “This is not good news for Durban and bad for trade growth,” he pointed out, noting that containers and automotive products were some of Durban’s main cargoes.

However, he said that asymmetries were being addressed by both the regulator and TNPA. As a result, port tariff changes that would address who paid for what were likely to emerge.

“There will be a major shifting of the deck chairs to Durban’s benefit, though the port is not addressing the high cost of doing business,” said Jones.

He said that this could be addressed by moving the port authority away from Transnet and possibly placing it under the National Department of Transport. Jones said there was some strong support in that direction in favour of this, in terms of the National Ports Act.

Although this would not appeal to the State or to Transnet, it would free up revenue to be invested into the port without conflicting with Transnet’s bottom line.

Edited by Samantha Herbst
Creamer Media Deputy Editor

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