Pressure for Action Grows as South African Ports Firm Flails

(Bloomberg) —

Business lobby groups are piling pressure on South Africa’s government to act against the management of state ports and rail operator Transnet SOC Ltd. for failures they say are hobbling economic growth.

The Pietermaritzburg & Midlands Chamber of Business wrote to Public Enterprises Minister Pravin Gordhan last week calling for action to “address the failures of Transnet’s top brass.” The Sept. 13 appeal came days after the South African Association of Freight Forwarders detailed a litany of failings by the company.

The criticism adds to a Sept. 12 letter to Gordhan by the business chamber of Durban, home to Africa’s biggest port, demanding the removal of Transnet’s top management. A similar call was made by the Minerals Council South Africa, which represents mining companies, in December. 

“Transnet’s current failures are crippling the country’s economy,” Melanie Veness, the chief executive officer of the Pietermaritzburg chamber, said in the letter. “Poor and ineffective leadership are the root cause.”

Transnet’s inability to effectively manage key South African infrastructure is raising costs in Africa’s most-industrialized economy, according to the nation’s central bank. Disruptions caused by chronic theft and vandalism of railways and locomotives have disrupted the company’s operations, costing miners tens of billions of dollars because they’ve struggled to ship coal and other products to export harbors.

‘Serious Interventions’

Gordhan, in a statement on Tuesday, acknowledged the letters and said a directive he gave to Transnet’s board three weeks ago to make recommendations on how to improve performance included a review of management.

The company’s performance “made it very clear that the entity urgently requires serious interventions that will address the root causes of the deficiencies that are having a negative impact on our economy,” he said. 

In 2022, the tonnage of coal railed to the Richards Bay Coal Terminal fell to a 30-year low. A 2021 World Bank index of container port performance ranked Durban 364th out of 370 and two other Transnet ports were also in the bottom 10.

In her letter, Veness said that Transnet CEO Portia Derby displayed “indifference” to attempts by business to help resolve the inefficiency at the port of Durban. The poor performance of a rail line between Durban and the industrial hub of Gauteng is costing private industry 800 million rand ($42 million) a month, she said, citing a municipal estimate. 

Transnet didn’t respond to a request for comment.

The freight forwarders association, in a weekly report on the cargo industry, bemoaned the “desperately low” handling of containers by Transnet’s ports and detailed problems currently bedeviling them. Some of the problems it identified include:

• A container-handling capacity “far from anything remotely approaching peak performance”
• “Dismal straddle carrier availability in Durban.” Straddle carriers are vehicles used to load and unload ships
• Only one helicopter being operational out of three deployed to the key Durban and Richards Bay ports
• Persistent cable theft on rail lines, leading to them being closed for hours

“The ongoing equipment shortages and other shortcomings in our ports are critically important and partly explain why throughput continues to lag and deteriorate,” the association said.

© 2023 Bloomberg L.P.

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