Industry welcomes court ruling clearing way for Durban Port upgrade

Industry players have welcomed the KwaZulu-Natal High Court’s decision to dismiss APM Terminals’ application to overturn the selection of International Container Terminal Services Inc. (ICTSI) as Transnet’s private equity partner for the upgrade of Durban Container Terminal (DCT) Pier 2 — a project seen as critical to restoring efficiency at South Africa’s busiest port.

ICTSI was appointed as the preferred bidder in July 2023 for a 25-year joint venture with Transnet Port Terminals (TPT) to modernise and expand the facility.

Pier 2 is the largest single container terminal at Transnet and handles 72% of the Port of Durban’s throughput and 46% of South Africa’s container volumes, making it a critical gateway of trade.

The State-owned logistics company said the ruling validated its procurement process, which it maintained was “rigorous and transparent”. A financial soundness report confirmed ICTSI’s ability to finance and execute the transaction.

ICTSI said the court found APM Terminals’ challenge was both delayed and unfounded, noting that the company waited until March 2024 to file papers despite the concession being awarded in July 2023.

The judgment also noted ICTSI’s transparency in its financial disclosures and emphasised that “a disagreement on a single financial ratio is not a basis to set aside the tender decision.”

The court further stressed the public interest in ensuring an efficient national port system, given its importance to South Africa’s trade and economic growth.

Industry experts hailed the decision as a crucial breakthrough after months of uncertainty.

Malcolm Hartwell, director and master mariner at Norton Rose Fulbright, said the original award had been viewed as a major milestone in Transnet’s broader private-sector participation strategy.

“APM's application to have the award set aside at a time when Transnet was struggling to provide adequate service in Durban was a huge blow to the industry. The inevitable delays caused by this litigation set back Transnet’s plans considerably,” he said.

“While APM may well be able to provide the same or better service than ICTSI, that is not the issue. The issue is upgrading DCT as soon as possible to get containers moving through our ports and logistics corridors as cheaply and efficiently as possible in order to help grow our economy, service our import and export sectors and retain South Africa’s position as the gateway into Sub-Saharan Africa.”

Hartwell said that Transnet’s balance sheet and problems of the past mean that it is unable, on its own, to provide the infrastructure investment our ports and logistics corridors desperately need.

“That has underpinned its drive for privatisation of various aspects of its operations. Confirmation of the award not only ensures private investment, but will also reassure other investors considering investing in South Africa’s logistics infrastructure as it lends credibility to Transnet’s entire invitation and assessment process.”

Peter Besnard, CEO for the South African Association of Ship Operators and Agents (Saasoa), said that the outcome was long overdue by the court, but the wait could continue if the ruling is successfully challenged.

“We are all aware that DCT is in dire need of a refit in terms of replacing equipment but whether it is run/managed by ICTSI or by Transnet new equipment is not going to appear overnight and will take months. Some new equipment has arrived and is being assembled but we have only replaced two gantry cranes out of 15,” Besnard said.

Dave Watts, an independent maritime consultant, said the resolution of the court dispute was "good news".

“However, the delays of more than a year have been costly. The exchange rate has also gone up and equipment is more expensive and this could be a concern," Watts said.

"Transnet and ICTSI might also have to make changes to the agreement in place due to the time passed and more expensive costs.”

Ulrich Joubert, an independent economist, said this ruling meant there's finality in the matter.

“It's good news that ICTSI International can redevelop Durban container terminals and it's good news the private sector is involved at the Port of Durban." 

BUSINESS REPORT