Transnet signs 25-year deal with global terminal operator to run busiest pier at Durban Port

Transnet has signed a 25-year partnership agreement with the world’s largest independent terminal operator for the strategic Durban Container Terminal (DCT) Pier 2.

The deal with International Container Terminal Services, Inc. (ICTSI) is expected to enhance terminal productivity, ultimately improving Transnet’s operational efficiency and container supply chains.

ICTSI was selected as the preferred bidder in July 2023 and has an excellent track record across the globe in improving the performance, service and efficiency of ports, Transnet says in a statement.

"Through the introduction of new equipment and advanced technology, DCT Pier 2 is expected to increase its capacity from 2 million to 2.8 million twenty-foot equivalent units (TEUs) and improve Gross Crane Moves per Hour (GCH) from 18 to 28 as well as Ship Working Hour (SWH) from 60 to 120."

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Stephen Grootes gets input from Andrew Pike, Head of the Ports, Rail and Logistics Sector at Bowmans, and Jan Havenga, Professor of Logistics at Stellenbosch University (SU).

As Pike explains, this agreement is not a traditional concession but rather the sale of the business of Pier 2, with Transnet forming a special purpose vehicle (SPV) which will be called Durban Gateway Terminal.

"ITCSI will acquire 50% minus one share in the SPV, but they'll have a majority on the board and will basically be given operational control of the whole of Pier 2 - they'll be running it as they feel fit and reporting to Transnet."

He describes the move as a hugely significant development, not just as the first of its kind in SA's port sector, but also as creating "a fantastic blueprint" for other pending private sector participation (PSP) projects.

Professor Havenga also highlights the reduction in cost that will result from the targeted increase in freight volumes and accompanying decrease in waiting times for vessels outside the harbour.

"It will just make logistics costs so much cheaper. In South Africa, our domestic cost of transport is roughly equivalent to the maritime cost of transport. So, anything here that needs to go to ports and come from ports back into our system, is just as expensive as the maritime leg towards the foreign port - most of the time a large chunk of that is due to delays in the port."

He also notes that this development comes along with getting private train operating companies involved in speeding up operations on our railway lines.

Scroll up to the audio player to hear more about the envisaged impact of the partnership on the operations of Durban Port