Latest news with #SouthernAfricanTransportConference
IOL News
4 days ago
- Business
- IOL News
Want to reform South Africa's ports? We need to make room for rivalry
South Africa's ports are crucial for trade and economic growth, yet they lag in efficiency. As the National Ports Authority pursues long-term concessions, experts warn that without fostering competition, the country risks high costs and lost opportunities. Image: Armand Hough / Independent Newspapers South Africa's ports play a vital role in supporting trade, investment, and economic growth. Yet despite their strategic importance, they remain among the least efficient in the world – a situation that contributes to high costs, delays, and declining competitiveness. As the National Ports Authority (NPA) moves forward with long-term terminal concessions – often awarded to a single operator in joint ventures with other Transnet divisions – there's growing concern that the current approach may do little to resolve the systemic issues facing the country's port sector. One of the most prominent voices raising the alarm is Dr Ryan Hawthorne, director at Acacia Economics and a leading expert in competition and regulatory policy. In a paper presented at the 43rd Southern African Transport Conference*, Hawthorne argues that building rivalry into port operations is essential. 'If we're simply replacing public monopolies with private ones,' he says, 'we're missing the opportunity to build a more competitive, efficient port system that truly serves the country's interests.' Monopoly concessions: A risky strategy The core issue lies in how terminal concessions are structured. The NPA, still legally part of Transnet, has awarded a number of 25-year leases to single terminal operators, often involving Transnet Port Terminals as a joint venture partner. According to Hawthorne, this approach entrenches monopoly control and limits the potential for service improvement. 'Monopolies tend to charge more, deliver less, and innovate slowly,' he notes. 'We're seeing a pattern of partial privatisation rather than real reform.' There is an emerging pattern of monopolies being partially privatised by Transnet, with little consideration for rivalry and the benefits this might bring to consumers and port users. Rather than breaking up dominant positions, the current model risks reinforcing them – just with new stakeholders. These concerns are echoed by global benchmarking. The World Bank recently ranked Cape Town's container terminal dead last out of 405 ports globally in 2024, with Durban and Port Elizabeth also performing poorly. 'While private-sector participation is a welcome step, it risks becoming a missed opportunity if it doesn't introduce genuine competition,' warns Hawthorne. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad Loading The case for competition But can so-called 'genuine competition' actually work? Hawthorne believes there is ample scope for rivalry within South Africa's port system. Durban alone is expected to expand its container-handling capacity to more than 11 million TEUs – enough for multiple competing operators. 'Ports of similar size internationally to Durban's current capacity host four or more terminal operators competing on quality and cost,' he explains. 'There's no reason South Africa can't follow suit.' Legal framework already in place The Ports Act of 2005 provides the basis for introducing competition by separating the NPA from Transnet and mandating that port access be granted in a transparent and competitive manner. However, the key step of structurally separating the NPA has not been completed. 'If the NPA were truly independent,' says Hawthorne, 'it would have an incentive to lease space to multiple terminal operators – not preserve the dominance of its sister company.' What can be done now In the short term, Hawthorne proposes a number of practical reforms. 'We need to complete the structural separation of the NPA from Transnet, as envisioned in the Ports Act. This would allow the NPA to operate independently and invest in expanding port capacity and enabling rival terminal operators, rather than protecting Transnet's downstream interests,' he notes. Furthermore, the Minister of Transport should issue a policy directive requiring competition assessments in all future concession processes. The new Transport Economic Regulator (TER) should be given the authority to review and, if necessary, amend monopoly concession agreements. 'The Competition Commission could also be called upon to investigate exclusionary practices in port operations, including abuse of dominance or refusal to grant access to essential infrastructure,' he proposes. Long-term vision: Foster inter-port competition Beyond immediate fixes, Hawthorne encourages a return to inter-port rivalry, as seen prior to the 1910 formation of South African Railways and Harbours. At that time, ports like Cape Town and Durban competed actively for shipping traffic, spurring innovation and improved service delivery. Today, similar systems exist in countries such as Brazil, Canada, and Australia, where individual port authorities operate independently under national regulatory oversight. 'We need to stop thinking of South Africa's ports as a single block,' says Hawthorne. 'Independent port authorities promoting competition within and between ports could drive the efficiency gains we desperately need. 'Competition is the missing piece in South Africa's port reform puzzle. Without it, we risk pouring money into concessions that do little for users. With it, we unlock the real potential of our ports – for traders, for consumers, and for the economy as a whole.'
The Citizen
08-07-2025
- Business
- The Citizen
Creecy punts private sector investment for five rail and port corridors
Transnet to begin formal procurement process at the end of August. Transport is 'a decisive investment trigger' and the current process will take SA's infrastructure 'to a different level'. Picture: Supplied Private sector investment in Transnet's five priority rail and port corridors appears to be imminent. Minister of Transport Barbara Creecy confirmed on Monday that the Department of Transport (DoT) has just concluded a request for information (RFI) process to guide private sector investment in these five corridors. In an address to the Southern African Transport Conference, Creecy stressed the limited availability of state resources to fund infrastructure development makes private sector investment critical. ALSO READ: Transport minister has big hopes for big plans 'Excellent response' Speaking on the sidelines of the conference, Creecy said South Africa's rail infrastructure has not had a major revamp, nor has the rail system been expanded, since the 1970s. 'We have put out these requests for information to see what the appetite is. We had an excellent response. 'There were almost 163 submissions,' she said. 'We are now processing those submissions so that Transnet can begin the formal procurement process at the end of August 2025 through the issue of Requests for Proposals (RFPs).' Creecy told the conference the DoT has concluded a Memorandum of Agreement (MoA) with the Development Bank of Southern Africa (DBSA) and National Treasury, appointing DBSA as the hosting institution for the new Private Sector Participation Unit. ALSO READ: Victory for Transnet: more cash incoming, union accepts salary increase Rail initiatives She said the DoT will, at the end of July 2025, release the second batch of RFIs, which will be focused on passenger rail initiatives. The Interim Rail Economic Regulatory Capacity has been established to create fairness and transparency for third-party operators, improve network utilisation, increase competition, and reduce costs. 'To sustain our economy, we cannot afford to wait until the PSPs [private sector participants] reach financial close before launching an ambitious programme to rehabilitate Transnet's rail network and rolling stock, as well as port infrastructure and equipment,' she said. Creecy said funding sources for immediate rehabilitation of the five priority rail corridors include the current Transnet budget for rail and rolling stock maintenance and purchase of port equipment, submissions to treasury's Budget Facility for Infrastructure (BFI), and private investment in refurbishing or expanding line capacity through existing customer agreements. She said Transnet itself makes annual allocations for maintenance but this is insufficient – and they have also put in an application to the BFI. 'Overall, it will be over R30 billion that we will be applying for,' she added. 'This would allow us to do maintenance and to buy equipment for the rail corridors and also in the ports.' ALSO READ: Government delivers R51 billion support to Transnet. Will it last? Major investment Creecy said there are two tranches and the July window application is already in while they are still working hard on preparing the application for the October window. 'We won't be able to do all of the ports and corridors all at once but we will be doing so incrementally as we process the information. What we can look forward to is some major investment in our rail corridors and also in our ports. 'Obviously it's going to take our infrastructure to a different level moving forward,' she said. These initiatives are in line with two of the six targets that Creecy highlighted in her Budget Vote speech in parliament last week, which are to: Ensure that by 2029 that Transnet moves 250 million tonnes of freight on its network each year; and Improve the speed at which ships are loaded and unloaded in South Africa's ports to the international benchmark of 30 gross crane movements per hour. The other targets are to: Ensure the passenger rail system provides safe, reliable and affordable transport to workers and their families, with the aim of ensuring 600 million passenger journeys a year by 2030; Boost the contribution of aviation to tourism, economic development and job creation, with the expectation of moving 42 million passengers a year through the Airports Company of South Africa (Acsa) network of airports by the end of this political term; Move 1.2 million tonnes of airfreight a year through the Acsa network of airports by the end of this political term; and Ensure greater safety on South Africa's roads and reduce the devastating toll that road accidents have on lives and livelihoods by reducing road fatalities by 45% by 2029 and thereby reach the United Nations target of halving road fatalities by 2030. Creecy said the large DoT ecosystem has in different ways been responsible for undermining economic growth and acting as a drain on the development of the economy and society. She said these six targets are written into the Medium Term Development Plan, which is the government's plan for the following five years. 'Fundamental to our reform programme is our intention to re-establish rail as the backbone for the transport of people and goods.' ALSO READ: Santaco wants faster progress on infrastructure and licensing reforms Matter of urgency Wrenelle Stander, CEO of Wesgro, the official tourism, trade and investment promotion agency for the Western Cape, told the conference that one of the key lessons she has learnt at Wesgro is that transport is 'a decisive investment trigger'. 'Seventy percent of investors say transport is a primary factor in site selection.' Stander emphasised that the World Bank says improving transport access for the poorest 40% of a population can increase income by up to 25%. 'In South Africa, where over 70% of the workforce depends on transport, this is not a theory. It's urgency. 'Transport must be reframed from a burden to a lever of national economic growth. 'Too often, it is treated as a cost, a social burden to be subsidised. Yet every rand invested in public transport can yield R2.60 in returns.' This article was republished from Moneyweb. Read the original here.
