In a landmark move aimed at transforming one of South Africa’s major maritime gateways, Transnet SOC Limited (Transnet) has announced the selection of International Container Terminal Services Inc. (ICTSI) as the preferred equity partner for the upgrade of the Durban Container Terminal (DCT) Pier 2. The 25-year joint venture between Transnet Port Terminals (TPT) and ICTSI is set to redefine the port landscape and stimulate economic growth.
DCT Pier 2, currently Transnet’s largest container terminal, plays a pivotal role in the Port of Durban’s operations, handling an impressive 72% of the port’s throughput and facilitating 46% of South Africa’s port traffic. The decision to bring in a private sector partner comes as part of Transnet’s strategy to bolster efficiency, foster innovation, and promote investment in the country’s port infrastructure.
“The partnership with ICTSI marks a significant step forward in our efforts to attract global expertise and investment into our port facilities. We believe that this collaboration will reposition the Port of Durban as a world-class container hub, benefiting both our nation’s economy and the broader maritime industry,” said Portia Derby, Transnet Group Chief Executive.
ICTSI, a leading independent global developer and operator of container terminals with operations in 20 countries, emerged as the top contender for this strategic joint venture. The company’s proven track record in handling over 12.2 million TEUs in the previous financial year and generating substantial revenues from port operations underscores its capability to drive growth and efficiency in port facilities.
The partnership aims to elevate DCT Pier 2 to best practice performance levels, enabling a surge in volume throughput and enhancing operational and commercial capabilities to attract major global shipping lines. This will undoubtedly elevate the logistics associated with servicing South African ports and have a multiplier effect on the nation’s trade, facilitating increased exports and imports.
Transnet’s growth strategy is strategically aligned with the vision of Transnet National Ports Authority (TNPA) to expand the Port of Durban’s container capacity from the current 3.3 million TEUs to an envisaged 11.4 million TEUs. By increasing Pier 2’s capacity from 2 million TEUs to 2.8 million TEUs, the partnership with ICTSI will contribute significantly to realizing this vision.
Shortlisted Respondents and Preferred Partner Selection Process
The journey to select the ideal partner for this joint venture has been rigorous and competitive. In August 2021, Transnet invited expressions of interest, receiving a total of 18 responses, including nine from prominent global terminal operators. Subsequently, 10 bids were shortlisted following a comprehensive request for qualifications.
The shortlisted respondents, six in total, were then invited to submit their detailed proposals, from which ICTSI emerged as the Preferred Bidder, excelling in various criteria set by Transnet for the selection process.
Key Elements of the Joint Venture
The partnership will establish a new company to oversee the operations at DCT Pier 2. Transnet will retain majority ownership, holding 50% plus one share. The term of the transaction is set for 25 years, with an option to extend up to 30 years if required, particularly in the event of berth deepening delays on the North Quay at Pier 2.
The table below highlights the essential elements of the joint venture:
|Ownership Structure||Transnet – 50% + 1 share; ICTSI – Remaining shares|
|Transaction Term||25 years (extendable up to 30 years if needed)|
|Assets and Contracts||Non-current assets, customer, and supplier contracts will be transferred to the new company.|
|BBEE Contribution||The new company must achieve a minimum level 4 Broad-Based Black Economic Empowerment (BBEE) status.|
|Terminal License and Lease||Transnet National Ports Authority will subcontract the terminal operating license and lease to the new company.|
|Employee Transition||DCT Pier 2 employees will be seconded to the new entity, retaining their terms and conditions.|
Benefits of the Partnership
The collaboration with ICTSI is poised to bring significant benefits to South Africa’s maritime landscape. By leveraging ICTSI’s extensive global expertise, technology, and best practices, DCT Pier 2 will witness substantial improvements in operational efficiency and productivity. This, in turn, will elevate the overall competitiveness of the Port of Durban, attracting more international shipping lines and trade.
The project’s economic impact will be profound, fostering job creation and stimulating export-import activities. As the port’s capacity increases over the coming years, businesses will find better opportunities to reach global markets, and South Africa will witness enhanced foreign trade inflows.
Implementation and Way Forward
With the selection process now concluded, Transnet will work closely with ICTSI to expedite the implementation of the joint venture. Legal agreements will be executed, and due diligence will be undertaken to ensure compliance with all relevant laws and regulations.
Transnet remains steadfast in its commitment to modernize and optimize South Africa’s port facilities. The success of the partnership with ICTSI for DCT Pier 2 sets a strong precedent for future engagements with global industry leaders, ultimately driving the nation’s economic growth and transforming the landscape of South Africa’s maritime industry.