Opportunities for private sector involvement in the container market industry in the Port of Durban.

Abstract

Transnet, the state-owned freight transport company, is responsible for rail transport, pipelines, port and marine services as well as many terminal operations within the port. The container terminal handling industry in South Africa is run predominantly by Transnet Port Terminals from Durban, Port Elizabeth, Ngqura and Cape Town. There are currently no private operators that handle containers in the scale handled by Transnet. The main object of this dissertation is to show by means of various case studies from both developed and developing economies that the involvement of the private sector results in increases in efficiencies and productivity. This has the net result of increasing the cost competitiveness of exports and reducing the landed cost of imports. As no new container terminals are being built in the short to medium term, this paper considers the financial feasibility of two different scenarios; one where a private bulk handling terminal in the Port of Durban is converted to a multi-purpose terminal handling containers, and the other where the same terminal is fully converted to a container handling terminal. The results indicate that due to the significant capital investment in running a container terminal, and the operational and land size restrictions, the full conversion to a container terminal would not be feasible. The lower capital investment and the flexibility of handling both bulk and containers makes the business case for the multi-purpose terminal more feasible.