Philippines' ICTSI to Co-Own and Operate Durban Container Terminal
Category State Property News
South Africa's ambitious plan to boost private participation in its ports has taken a significant step forward with the announcement that Philippines-based International Container Terminal Services Inc (ICTSI) has been selected as an equity partner to operate and expand the Durban Container Terminal Pier 2. This historic move marks the first time a foreign company will partly own and operate a major South African harbor.
The Durban Container Terminal Pier 2 is a crucial component of the Port of Durban, Africa's largest harbor, handling nearly half of South Africa's port traffic. According to the state logistics company Transnet, approximately 46% of the country's total port traffic is processed through this terminal. However, the terminal's current performance has been lacking, with Durban ranking a dismal 364th out of 370 ports in the 2021 World Bank index of container port performance.
The decision to involve a private sector player, ICTSI, comes as part of South Africa's efforts to revitalize its ports, which have long been hampered by inefficiencies, outdated infrastructure, and congestion issues. Transnet, the national ports company, seeks to reposition the Port of Durban as a thriving container hub port with the help of this partnership.
Transnet will retain 50% plus one share ownership in a new company that will jointly manage the terminal with ICTSI for a period of 25 years. During this time, the partners aim to increase the terminal's annual capacity to 2.8 million 20-foot equivalent units (TEUs) from the current two million TEUs, effectively enhancing trade volumes at the container port.
To browse available warehouses in Jacobs, Durban, click here.
In the long term, Transnet has ambitious plans to expand Durban's total container capacity from 3.3 million TEUs to 11.4 million TEUs. This transformative goal seeks to elevate the Port of Durban to a prominent position within the global trade landscape.
While ICTSI operates terminals across six continents and four African countries, the company will become the eighth-largest container terminal operator in the world by TEU once this venture is fully realized. ICTSI's involvement in the expansion and management of Durban Container Terminal Pier 2 is expected to bring world-class expertise and operational efficiency to the port.
To browse available warehouses in Riverhorse Valley click here.
The move towards semi-privatization of the terminal has sparked optimism for the region's economic growth and job creation. The South African government, in line with its Operation Vulindlela program, is actively pursuing private sector participation in the ports to boost economic development.
The successful partnership with ICTSI was achieved after a rigorous selection process, where six bidders were shortlisted from 17 potential equity partners who expressed interest in August 2021.
The joint venture will establish a special purpose vehicle (SPV) to oversee the port's operations. As part of the agreement, employees currently working at the Durban Container Terminal Pier 2 will be seconded to the new entity, with no retrenchments planned. The terms and conditions of employment will remain unchanged before and after the introduction of the private sector partner.
To browse available warehouses in Pinetown click here.
While the financial specifics of ICTSI's stake and funding for the expansion were not explicitly disclosed in the announcement, the deal has received approvals from the South African government, adhering to the Public Finance Management Act.
South Africa's pioneering move to partly privatize the Durban Container Terminal Pier 2 represents a transformative step towards optimizing port performance, increasing trade capacity, and spurring economic growth in the region. With the expertise and investment from ICTSI, the Port of Durban is set to chart a new course as a prominent container hub in Africa and on the global stage.
Warehouse Finder is a Specialist Industrial Property Brokerage. Since 2011 Warehouse Finder has been assisting our occupier clients in securing their industrial properties.
Call us directly at 0860 009 531 or email info@warehousefinder.co.za
Author: Craig Cooper
