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Navigating troubled waters: Unpacking South Africa’s port challenges and charting a course for transformation
Market Insight 11 January 2024 11 January 2024
Recent congestion experienced across South Africa’s major ports has severely impacted the country’s imports and exports operations, with large local retailers such as Pepkor Holdings reportedly having up to 700 million rands worth of stock stuck at sea during November and December.
Backlogs outside the Port of Durban reached a crisis point between the 23rd and 30th November 2023 when an estimated 79 vessels and more than 61,000 containers were forced to remain at outer anchorage due to operational challenges, equipment failures, and bad weather at the port. The Port of Cape Town has also had its fair share of recent logistical woes, experiencing similar delays at its Container Terminal. This, in turn, led to significant congestion along the Eastern Cape coastline, with an estimated 46,000 containers said to have been stuck outside the Ports of Ngqura and Gqeberha in late November. While the congestion has begun to ease at our ports, reports indicate that it will take until mid-2025 for the Port Terminals to regain optimum functionality.
Recent reports from Transnet SOC Ltd (Transnet) provide that, in addition to adverse weather conditions, the recent congestion can be attributed to underinvestment in equipment and maintenance. The performance of our ports has regularly come under scrutiny due to the contrast of having one of the busiest ports in Sub-Saharan Africa—the Port of Durban—serving as a vital transit route and logistics hub for the movement of raw materials shipped cross-border from neighbouring countries. On the other hand, our ports consistently rank towards the lower echelons of global ranking reports published annually by international organizations such as the World Bank. Such scrutiny isn’t unfounded, as the Port of Durban consistently ranks among the busiest ports in the world on the Lloyd’s List's One Hundred Ports rankings, moving from 45th with a throughput of 2,710,000 twenty-foot equivalent units (TEUs) in 2011 to 79th with a throughput of 2,574,931 TEUs in 2022.
Despite maintaining a place among the world’s busiest ports, the latest revision of the Container Port Performance Index by the World Bank (2022) ranks the Port of Durban 341 out of 348 ports overall, with the Port of Cape Town following closely behind ranked 344. The CPPI rankings are based on the average port hours per port call, with port hours being the total time elapsed from when a vessel first arrived in port to when the vessel departed from its berth. The delays experienced at the port have a direct impact on the operating costs of shipping lines, and the broader port sector can no longer remain ignorant of the current challenges. This is underscored by the recent imposition of port congestion surcharges by major shipping lines, including the likes of Maersk, Compagnie Maritime d’Affretement, Compagnie Generale Maritime, and the Mediterranean Shipping Company.
While the inefficiencies of South Africa’s port terminals have led to the increasing diversion of cargo to neighbouring competitors, such as the Ports of Maputo, Walvis Bay, and Luanda—subsequently threatening South Africa’s long-term trade competitiveness—according to the South African Association of Freight Forwarders (SAAF), the fact that our ports continue to handle more vessels means that any comparison currently is a futile exercise. Notwithstanding the interchangeability of the different transport modalities, from a South African context, SAAF notes that there currently exists a misalignment between designed capacity and demonstrated capacity. In particular, the declining performance of the South African freight rail network represents the greatest challenge. The lack of sufficient and functional rail infrastructure has created a significant disparity, particularly in the movement of bulk commodities such as coal and iron ore. This has led to the distorted overuse of road transport and, at times, expensive air freight options to compensate for the deficiencies in our rail network. At a recent meeting held in November 2023, SAAF noted that between 8,000 and 9,400 heavy vehicles transited the N3 bound for the Durban Port daily, handling 7,464 twenty-foot equivalent units (TEUs) in both imports and exports.
Recovery & Resolution
Local retailers and other importers/exporters of goods will be relieved to note that there are currently various joint efforts from the Department of Transport, Transnet, and private companies underway in the hopes of addressing the abovementioned deficiencies and operational shortcomings. The National Logistics Crisis Committee (NLCC) has been established to enable a coordinated response to address the challenges in our freight and port logistics network, based on three principal objectives: improving operational performance, implementing reforms, and establishing enabling conditions within the freight storage and transport system. The NLCC intends to further support Transnet’s Recovery Plan through various measures, including stakeholder alignment, the mobilization of resources, as well as navigating existing challenges and ensuring accountability.
Enhancing operational performance has rightfully been recognized as an immediate priority. To this end, core priorities identified and forming part of the Transnet Recovery Plan for Port Terminals include:
- Addressing immediate operational needs through short-term equipment solutions. Operational performance is significantly impacted by equipment shortages, including ship-to-shore (STS) and mobile cranes, tugs and pilot boats, helicopters, RTG cranes, straddle carriers, and haulers, and capacity constraints at key ports, which must be addressed in the short to medium term.
- Conducting regular maintenance and minimizing operational disruptions as a consequence of equipment shortages, specifically container handling equipment. This includes carrying out regular equipment audits in identifying equipment requirements tailored to the unique specificities of each port, as well as reviewing equipment spare part inventories and churn and implementing equipment replacement and refurbishment programs to extend life and reliability and to guarantee that high-quality parts are readily available.
- Enhancing ‘soft infrastructure’ by recruiting and developing skills in critical port domains, including operations, technical, and planning. The importance of doing so is underlined by the fact that the decline in the performance of key ports in South Africa may be closely attributed to ‘soft’ issue factors, including high staff turnover, low employee morale (linked to equipment failure and underinvestment), and the loss of critical functional skills. ‘Soft’ infrastructure is intricately linked to investing in ‘hard’ infrastructure and must be addressed through skills development and training programs, shift arrangements, and a focus upon staff productivity. Together with a review of operational methodologies, output per employee and overall operational efficiency may be maximized through gang-to-equipment optimization. The Durban Container Terminal Pier 2, for example, ordinarily operates with fewer work gangs than cranes, consequently resulting in reduced outputs.
- Implementing an updated incentive scheme and enhancing collaboration to drive performance and development. Ultimately, a fundamental element to establishing a totally integrated logistics system is enhancing private and public sector collaboration and involvement, as well as continuous communication between all parties.
- Enhancing data-driven decision making through the integration of business intelligence tools and processes. Part of this objective involves the phased implementation of semi-automated processes (and eventual full automation) in container terminals, which will go a long way in improving productivity outputs.
Further port performance improvement initiatives forming part of the proposed interventions (based on recommendations from a recent study undertaken by the World Bank and commissioned by Transnet) for enhancing port efficiency are centred upon employees (i.e. establishing KPIs and scorecards for executives, integrated into performance management systems), Management Information Systems (i.e. collecting and utilizing real-time data and time-stamps to identify and address inefficiencies within start-up and finish processes), stakeholders (i.e. strengthening customer communication through the Customer Interaction Centre and fostering supply chain collaboration through a Cargo Connect Platform), supervision and training (i.e. implementing skills development programs, auditing and enhancing the skills of quality control and straddle carrier operators.), facility and asset management (i.e. reviewing equipment spare parts inventory and churn to ensure sufficient high-quality parts are readily available) and yard and flow re-organization to optimize processes. Under the abovementioned key objectives of the NLCC and Transnet’s Recovery plan, efforts to support operational efficiencies through increased equipment availability have already commenced with:
- Cape Town’s container terminal has acquired 7 pre-used rubber-tired gantry cranes and is advocating for the potential use of other landside equipment capable of dealing with adverse weather conditions.
- The Port of Durban, as of December 2023, has increased its average tug availability to six and further introduced a 24-hour helicopter service in a bid to improve vessel turnaround times.
- Transnet publicised its intention to call for proposals for the reconstruction of the Pier 2 North Quay container terminal, which would cater for the effective berthing and handling of three Super Post Panamax Vessels, 350 meters in length and with a draft of 14.5 meters.
Addressing South Africa's current logistical challenges will surely require the swift implementation of a multi-faceted approach, encompassing immediate operational and organizational interventions, medium-term process optimizations, and long-term infrastructural transformations. The immediate action taken by Transnet following recent delays is a positive response, and hopefully, the momentum can be maintained, with sufficient support from the NLCC. Boosting our ports' efficiency with the currently available infrastructure would serve well to regain status as a gateway to trade in Africa, further boosting local and foreign investments. Fraught with various issues and challenges for several years, South Africa’s port logistics system finds itself at important crossroads. However, concerted action and the establishment of collaborative practices fuelled by the crisis may catalyze the transformation required, propelling South Africa towards realizing the true potential of its blue ocean economy and rightfully cementing itself as a logistics powerhouse in Africa.