DAVID GRETTON: SA’s harbours must have a better understanding of clients
Why not make each port a business entity capable of independent action to promote the businesses of all port users, existing or potential?
President Cyril Ramaphosa has stated that the government has a plan to sort out the disastrous performance of the ports, and that the private sector will help. Sadly, experience does not support his comment and the provision of empirical evidence was sadly lacking.
The history of SA's ports, and indeed the whole of Transnet, is one of missed opportunities, poor planning, insufficient investment and lackadaisical action, which have all resulted in declining performance.
In the past the ports and pipelines were the so-called “honeypots” that cross-subsidised all of Transnet’s operations, but that is sadly no longer so. At one time Cape Town and Durban were talked of as being hub ports of regional significance, and despite evidence to the contrary Coega was subsequently built with this idea in mind.
A study some years ago found that the port of Rotterdam was responsible for up to 15% of the Netherlands' economic performance. Singapore handles a fifth of all containers worldwide, having used its geographic location to become a major transshipment hub as well as enhancing it entrepot status.
In both cases much of the traffic handled is for transshipment and/or on-carriage to other countries. Bizarrely, Cape Town — hopefully temporarily — recently went from being a hub port to become a feeder to Mauritius.
International ports invest in market analysis and marketing promotion. How many of SA ports invest in promoting their products internationally to attract new business? In many of the hub port examples export processing zones (EPZs), industrial development zones (IDZs) or similar bond-free areas are either a part of, or adjacent to, the port — air or sea.
In SA we have done this on a limited scale, and only Coega is well connected to the port. In addition, the government has selected the sectors to be supported at the IDZs. But international ports are not just suppliers of a service but help drive economic development.
Cape Town’s harbour does cater for more than just freight and containers, tourism, fishing, cruise liners, dry dock, victualling/refuelling, oil rig repair/refit (a sector now seemingly lost to SA, with the exception of a few at Coega.) It is the gateway for international teams going to Antarctica, yacht building and the yacht club. All of these sectors are reliant on the harbour.
Efforts to assist the Cape Town harbour have been numerous. There have been studies, and the City of Cape Town has approached national government offering help. The provincial government and the local chamber of commerce established task teams to help improve operations, but sadly none of this has stopped the downward decline.
Frankly, these efforts have all been at the margins. What is needed is a change of the management/operational model. We need a competitive element to be brought into the system, but I have an awful feeling the president’s idea of private sector help is limited to the existing framework. Indeed, the draft Enterprise Bill seems to support this concern.
SA is one of the few countries in the world that has all major logistics operations, apart from road, under one monopoly body. Worldwide the most successful ports are owned by local government. The Ports Act of 2005 makes provision to separate the ownership of the port land from that of operations. However, there has been little attempt to implement this concept.
It took about 15 years to implement the concept of the Ports Act to split Transnet and create a Transnet National Ports Authority, but experience has shown that it is hardly independent except in name. Port management and freight handling all still largely fall under one of the Transnet companies.
We have seen with the attempt to outsource management of some railway lines how reluctant Transnet is to relinquish control. But there needs to be a complete break between land ownership and operations. Let the individual terminals and port operations compete. Introduce independent port pricing.
Why should all ports charge the same rates? Cape Town, Gqeberha or East London should be freed to compete for traffic, possibly using pricing, if they are capable of doing so. Maputo and Walvis Bay are currently taking traffic away from SA ports anyway, so why not give all the local ports more independent authority to compete?
The mayor of Saldanha has indicated that he would like his local harbour to handle containers. Why not? Local business generally has a better understanding of what is required to promote local economic development. Why not make each port a business entity capable of independent action to promote the businesses of all port users, existing or potential?
We need to bring in international port operators to help manage our ports, as has been done successfully by Maputo. There are plenty of international port operators that would like to quote to manage our ports.
It is worth remembering that in former minister Alec Erwin’s time Coega was to be run by P&O Ports, but central government balked at the idea.
Let us have harbours that have a better understanding of, and are closer to, their client bases. This could enable our ports to provide services that are competitive both locally and internationally.
The existing centralised model has clearly failed, so let's follow the global trend and break up the Transnet logistics monopoly. We need a new model for logistics in this country.
• Gretton, a former research fellow in transport studies at the University of Westminster, worked in the logistics industry in London and various SA cities.
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