Tuesday, 5 November 2024
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Container terminals’ backlog costs business millions, and Transnet nothing

Home Transport & Logistics Exports & Imports Container terminals’ backlog costs business millions, and Transnet nothing

THE South African Association of Freight Forwarders estimates that the 96 vessels waiting at anchorage outside the country’s commercial ports, is costing R98 million a day in direct, sunken costs, at least R26 million a day in indirect costs, and impeding at least R7 billion worth of goods from moving every day. Yet the cost to Transnet is nothing.

Transnet Port Terminals (TPT) Durban Container Terminals managing executive, Earle Peters, said the backlog would not lose DCT revenue, “just the timing is different” as the vessels will be processed. Durban Container Terminal operates as two terminals Pier 1 and Pier 2, handling 65% of South Africa’s container volumes.

Businesses are scrambling to keep customers and maintain profits, while Transnet operates as a monopoly and the group posted a R5.7 billion loss for the year ended in March 2023.

The South African Association of Freight Forwarders (SAAFF) CEO, Juanita Maree, says “It is important to note that the international shipping industry works on schedules – almost like a bus schedule. Commitments are made to call at specific ports at specific times. Currently, the shipping lines’ commitments cannot be honoured, as the queue waiting to call is way too long for the system to handle – hence the reaction of implementing port congestion surcharges to recover some cost. It also explains the reason why the lines are choosing to ship cargo to and from South Africa via the hub port of Port Louis in Mauritius. These unintended consequences further impact cargo owners – especially SMMEs.”

Earlier this month, the container line, MSC said it would be imposing a hefty congestion surcharge on cargo from any destination (excluding East and West Africa) to South Africa. The surcharge will be effective from December 3. MSC is justifying the surcharge due to the congestion in the South African ports generating difficult conditions in which to operate.

According to Peters, the congestion fee surcharge inspired TPT’s current recovery plans. He said that there are ongoing negotiations with shipping lines on releasing the congestion surcharge.

Durban Container Terminals’ plan

Transnet is working to a plan to ‘stabilise’ DCT operations and communicated the details of this in a media statement issued on Friday, November 17 and a media briefing on Monday, November 20.

Transnet said that, on Friday, a total of 63 vessels were recorded at the Port of Durban’s outer anchorage and of these, 20 were destined for DCT Pier 1 and Pier 2 managed by TPT. With all initiatives employed, it would take Pier 1 seven weeks to clear the backlog and 15 weeks for the larger operation at Pier 2.

At Pier 2, the plan is to ramp up the tempo from 2500 to 4000 containers per day over three months. Pier 1 will increase from 1 200 to 1 500 containers per day.

Interventions

  • The terminals have employed overall equipment effectiveness and advanced modules of the container management system Navis, to address operational inefficiencies.
  • There was a recruitment drive to fill positions for the newly implemented fourth shift that will ensure sustained operations.
  • The awarding of the maintenance services contract for the existing equipment to Transnet Engineering has been finalised.
  • The digital tracking and monitoring of key performance indicators on the ground is in progress.
  • Peters also said that TPT was using adjacent terminals at Pier1 and the Maydon Wharf multi-purpose terminal where possible to accelerate the recovery.

Procurement

  • To sustain current operations, the sourcing of second-hand cargo handling equipment from customers as a temporary measure was underway. A 24-hour maintenance regime had also begun to secure the availability and reliability of existing equipment in the interim. The implementation of the original equipment manufacturer (OEM) strategy for the acquisition of container handling equipment over the next 10 years and the asset life cycle management over the next 20 years has been finalised.
  • The awarding of the spares and maintenance services contract for the existing equipment namely ship-to-shore cranes, rubber tyred gantry cranes, straddle carriers, reach stackers and empty container handlers was in the process of award with delivery of service expected before the end of the year. The refurbishment and maintenance of some of this equipment has begun in order to improve asset utilisation.
  • In the first three months of 2025, Pier 1 will replace 16 rubber tyred gantry cranes and Pier 2 will acquire 36 straddle carriers. Then in 2026, Pier 2 will acquire four more ship-to-shore cranes.

Improvement

SAAFF said on Tuesday, November 21, that the throughput shows the following figures across South Africa’s commercial ports in the last week:

  • Cape Town Container Terminal handled ~1 582 (+5%, w/w) containers a day
  • Durban Container Terminal Pier 1 handled ~1 404 (-2%, w/w) containers a day
  • Durban Container Terminal Pier 2 handled ~2 889 (-4%, w/w) containers a day

“These are all much lower than the demonstrated capacity of the terminals (Cape Town Container Terminal – CTCT and Durban Container Terminal – DCT) Pier 1 is around ~1 800, and DCT P2 is around ~3 400). Therefore, these volumes are around 84% of the volumes that the terminals have shown that they can handle. Fortunately, however, the volumes are around 28% more for CTCT and 13% more for Durban than the average from January 2022 to the present, which shows some improvement,” said SAAFF.

Durban Container Terminal Pier 2 is due to commence a public sector partnership (PSP) with Phillipines-based International Container Services Inc (ICTSI). Transnet said earlier that it expects the partnership to be in place by April 2024 and that a due diligence process is currently underway.  Peters said that there was no evidence of sabotage at the terminals, but that the backlog had accumulated mainly due to lost time because of the weather and unreliable equipment.

“You need to be in our environment to understand how each employee has heeded the call to do the best possible with existing resources so that we see our customers and South Africa through,” said Peters.

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