Transnet: South African ports, wage demands, and low global port container rating
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The International Maritime Organisation’s World Maritime Day Parallel Event took place in South Africa in October this year.
We expected that delegates from the 173 member countries of the IMO would descend on our shores in Durban for this prestigious event.
In his keynote address delivered by the Minister of Transport he spoke about everyday events such as renewals of leases of tenants which is of no interest to international guests.
He further stated. “Coastal shipping occupies centre stage of our developmental efforts” With capital expenditure budget of as little as R1m in 2019 and R24 million for 2020 that was allocated to Ports facilities, we are in serious trouble if a Minister hopes to fool South Africans and that in front of a large foreign maritime delegation. What a pity that our Ports are in the current state of disarray whilst the world’s eyes are on us.
In June 2021, President Ramaphosa announced the decision to corporatize the Transnet National Ports Authority as an independent subsidiary of Transnet. How this will solve anything is a mystery. Maria Ramos unbundled Transnet from SAA and ACSA and in no way did this bring about any improvement in performance. Transnet was restructured in Prasa and Freight with the same result.
The current strike over wages is quite a conundrum.
The remuneration bill makes up nearly 60% of Transnet’s total annual expenditure of R45-billion.
Add the costs of servicing debt and Transnet’s find itself in an unsustainable situation.
One can only wonder how they have stopped functioning so many services and yet they kept people on the payroll.
The ghost worker issue has obviously not been resolved either.
The World Bank, 2021
“The Container Port Performance Index 2020: A Comparable Assess Our Ports are rated extremely low in The Container Port Performance Index 2020. In a list of 351 Ports rated, CAPE TOWN comes in at position 347, PORT ELIZABETH at 348 and DURBAN in position 349. Quite frankly in a world power generator rating even Eskom will rate higher.
South Africa has the following harbours;- Durban, - Richards Bay, - Cape Town, - Port Elizabeth, - East London, - Mossel Bay, Saldanha Bay, - Port Nolloth and - Coega.
The above number looks like this: 60 000 000 000 000.00 tons moved over this distance.
The growing digitisation of supply chain transactions and the greater virtualisation of economic activity that took place during COVID-19 appear to have left a lasting effect.
For example, digitisation created new opportunities to coordinate activities and communicate with consumers in more efficient ways than was previously conceived and to reduce costs.
The maritime sector offers the most economical, energy efficient, and reliable mode of transportation over long distances.
A significant and growing portion of that volume, accounting for approximately 35 percent of total volumes and over 60 percent of commercial value, are carried by containers.
Poorly performing ports are characterized by limitations in spatial and operating efficiency, limitations in maritime and landside access, inadequate oversight, and poor coordination between the public agencies involved, resulting in a lack of predictability a Poorly performing ports are characterized by limitations in spatial and operating efficiency, limitations in maritime and landside access, inadequate oversight, and poor coordination between the public agencies involved, resulting in a lack of predictability and reliability.
In maritime economics, measurement of supply and demand for shipping services is established over the ton–mile metric.
Two dimensions of shipping services are essential: the volume of cargo being carried (ton), and the distance sailed (nautical mile) for the shipment. The product of these dimensions (ton–mile) is globally accepted as the scale of shipping services.
According to Africa Ports and Ships newsletter, 17 October 2022, “Recently ‘Gaschem Aachen’ has been repeatedly calling at Cape Town, Port Elizabeth and Ngqura to deliver LPG parcels from Saldanha Bay.
A Ship named Gaschem Aachen docked at Saldanha Bay harbour, thereafter it moved on 13th October, bound next for Ngqura (Coega) harbour in the Eastern Cape, where it arrived on 15th October. On entering Ngqura, she went alongside the already berthed large LPG tanker ‘Tokyo’ (cargo capacity 66,000 m3), presumably to begin to ship transfer of LPG. The ship will bring this LPG cargo back to the Saldanha Bay storage facility or transfer it to the nearby Easigas LPG storage facility in Port Elizabeth.”
Recent voyage schedule has been Saldanha Bay- Port Elizabeth- Saldanha Bay- Port Elizabeth- Saldanha Bay- Cape Town.
Peaking power stations were designed to be used only during ‘peak periods’ when demand rises abruptly, and in emergency situations.
Had LPG been used for both power stations, it would have reduced the operating costs by up to 50%.
Maritime transport carries more than 80 percent of global merchandise trade by volume, and any impediment or friction at the port will have tangible repercussions for their respective hinterlands and populations.
In the short term, this is likely to take the form of shortages of essential goods and higher prices, as we saw early in the pandemic.
But over the medium to longer term, an inefficient port will result in slower economic growth, lower employment, and higher costs for importers and exporters.
According to StatsSA the total capital Expenditure by the State came to R42 in 2019 and R42,960 million in 2020. Of this amount as little as R1m in 2019 and R24 million for 2020 was allocated to Ports facilities.
The respective numbers spent on furniture and fittings were R1,907 million for 2019 and R1,699 million for 2020. South Africa now loses Billions of Rand due to the congestion at our Ports.
This lack of proper management of the taxpayer’s money is a disgrace and a very sad state of affairs.
Exporters and importers all have serious negative implications due to the bottleneck at the ports. The Ficus is also losing tax revenue and jobs and livelihoods are at stake.
The Above table illustrate the current governments lack of developmental political will.
Whilst the entire world is heading to Zero CO2 emissions and the move away from coal a paradoxical situation developed.
Since the outbreak of the war in Ukraine and the energy crises commenced South Africa Coal mines were rushing to send as many coal trucks to the Richard Bay Port as they can.
Carte Blanche aired an alarming situation and inaction of the Minister of Transport.
Deadly Coal Run Carte Blanche:
The Minister of Transport was contacted and repeatedly warned and begged to intervene before the children lost their lives. (View the insert from Carte Blanche mentioned above).
Eventually Fikile Mbalula arrived via helicopter to get a first-hand look. He banned the trucks, for the time being, from the N2.
But the accidents followed the trucks. On the R34 and R36 routes no less than 37 truck accidents occurred in 22 days.
The Ports know who delivers to them and who is responsible for the reckless chasing after profits over lives.
The collective authorities are failing the people of our country. It so happens both these authorities falls under the same Minister, Fikile Mbalula.
Corrie Kruger is an independent analyst.
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