DCT Pier 2 partnership to be ‘catalyst for change’, TPT chief asserts

15th August 2023 By: Terence Creamer - Creamer Media Editor

DCT Pier 2 partnership to be ‘catalyst for change’, TPT chief asserts

The Durban Container Terminal Pier 2

Transnet Port Terminals (TPT) CEO Jabu Mdaki is optimistic that the joint venture (JV) with International Container Terminal Services Incorporated (ICTSI) will be implemented from the start of the State-owned company’s new financial year in April and become a “catalyst for change” across the Transnet-owned division.

The Philippines terminal operator was named in April as the preferred bidder to partner with TPT at the Durban Container Terminal (DCT) Pier 2, and processes are currently under way to advance the transaction towards financial close.

Mdaki tells Engineering News that the partnership is being pursued in a bid to bolster the operating performance of South Africa’s biggest container terminal, which handles 72% of the Port of Durban’s throughput and 46% of the country’s overall port traffic.

ICTSI, which has 34 terminal operations in 20 countries, including four in Africa, will buy a 50% (minus one share) interest in the terminal for an as-yet-undisclosed fee and will, together with TPT, participate in the ‘Newco’ being established to operate DCT Pier 2 for the coming 25 years.

The new company will operate independently with its own board and executive committee for the period, after which the terminal will revert to TPT.

The partnership could be extended to 30 years in the event that berth deepening of the North Quay at Pier 2, on which a proposed expansion of the terminal’s capacity is dependent, is delayed.

Transnet National Ports Authority is responsible for deepening the berth from 12.8 m currently to 16.5 m so as to enable the terminal to accommodate three 350 m vessels at Berth 205, which would carry average consignments of up to 12 000 twenty-foot equivalent units (TEUs) in a single call.

“Our expectation is that, come April 1, 2024, the JV will be operating,” Mdaki reports, adding that significant progress is being made to secure all the approvals needed to complete the transaction, including from the Department of Public Enterprises and the National Treasury.

Several TPT managers, including Mdaki, will be travelling to the Philippines during August to gain insight into ICTSI’s operations and its operating philosophy.

Transnet and government, which is promoting private sector participation in South Africa’s ports and railways as part of reforms being pursued under Operation Vulindlela, believe ICTSI’s experience, technology and capital will assist TPT in raising DCT Pier 2’s capacity to 2.8-million TEUs over the coming five years.

Currently the terminal is handling about 1.9-million TEUs; a tempo that the partners aim to raise through targeted investments designed at delivering a ship working hour improvement from 50 to between 80 and 120, while also increasing gross crane moves per hour from the current 18 to 28.

No capital investment figure has been disclosed, but Mdaki confirms that investments will be made by the new entity, which could even raise capital independently of its owners, to increase the terminal’s capacity.

Mdaki reports that a key objective will be to increase crane density at the terminal with only a minor reconfiguration.

“The critical equipment at the terminal are the ship-to-shore cranes. Pier 2 currently has 14 cranes, but the JV could add about six more.”

Investments are also likely to be made into straddle carriers and rubber-tyred gantry (RTG) cranes, with a decision yet to be made as to whether it might be more efficient to convert most of the operation primarily to RTG cranes.

Mdaki insists there will be no retrenchments and that all 1 988 of DCT Pier 2’s employees will retain the same terms and conditions as their TPT peers.

He reports that intensive consultations have been ongoing with staff and unions since August 2021, with a joint task team having been formed with the South African Transport and Allied Workers Union and the United National Transport Union at the level of their general-secretaries and full-time shop stewards.

Employees at the DCT Pier 1 and the multipurpose terminal will be unaffected by the partnership but will continue to be exposed to exchange programmes with other terminal operators.

On whether the transaction will lay the basis for similar JVs at other TPT operations, Mdaki says the idea is to use the experience as a possible template for further partnerships.

“At this stage, there is nothing that I can announce but we are looking at terminals where we do not have enough volumes to see if we can partner with others so as to make them sustainable,” he said, making specific mention of its agricultural terminals in Durban and East London.

No partnership solution has been found yet for the Ngqura Container Terminal, however, where there was insufficient interest from the private sector for a proposed partnership similar to the one being implemented at DCT Pier 2.

“Overall, we want the DCT partnership to be a catalyst for change not only at Pier 2, but for the rest of our terminals,” Mdaki stresses.