Durban will be the main beneficiary of Transnet’s R3.4 billion port equipment upgrade

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JEREMY MAGGS: South Africa’s ports have faced ongoing challenges with inefficiency, but significant investment is poised to transform the landscape. Transnet has pledged R3.4 billion to modernize its fleet, with the Durban Container Terminal receiving the brunt of this funding. If I’ve understood correctly, this investment will lead to the acquisition of over 100 new cargo handling machines, enhancing operational capacity and potentially alleviating the backlog that has affected the port for some time.

As part of its broader recovery strategy, Transnet aims to bolster infrastructure, improve efficiency, and establish a more dependable supply chain for businesses reliant on port logistics.

Joining me now to delve into this investment and its broader implications for Transnet and Africa’s trade economy is Andile Sangqu, chairperson of Transnet. Chairperson, welcome, and thank you for being here. To start, what has motivated the utility to designate such a substantial portion of its investment to Durban?

SANDILE SANGQU: Thank you, Jeremy. You might remember that in December 2023, we encountered significant congestion in our port, which really strained our capacity to move goods in and out of the country. A new board was established in July 2023, and we subsequently approved a recovery plan in October 2023.

A key element of that plan involved upgrading our port equipment and enhancing safety measures to make our ports reliable, safe, efficient, and equipped with dependable machinery while also adopting the latest technology.

As you may recall, this program began last year with the delivery of seven tugboats at a cost of around R1 billion, five of which were allocated to the port of Durban, and the others were for Port Elizabeth [Gqeberha] and East London.

Read: Durban port gets container handling boost

Thus, this new investment accelerates our port upgrade initiative and tackles the systemic issues that led to the challenges we faced in December 2023. This equipment forms the first batch to be delivered throughout the year.

We’ve established a delivery schedule, beginning with Durban as of yesterday, and in March and April, we will receive similar quality and reliable equipment at the port of Cape Town, subsequently rolling out to our other ports.

To answer your question, we are intentionally acting to implement our recovery plan and ensure that we significantly change the way our port system functions.

JEREMY MAGGS: I recognize your intentionality, but one might argue that action has been delayed too long, particularly in Durban, which has been in a precarious situation for several years. What is the timeline for when all the new machinery will be fully operational and affect real change?

SANDILE SANGQU: You are right, Jeremy. This should have been addressed sooner, yet I don’t want to dwell too much on the past. What’s done is done, and we’ve all learned from it. I must extend my gratitude to our employees who have remained committed to ensuring operations despite the tough conditions.

With the arrival of new equipment, it should boost morale among employees and improve customer satisfaction.

Ultimately, we expect it to positively impact economic activities, both within the port and across the wider economy.

Regarding your question, as mentioned, we’ve initiated the delivery of equipment, some of which is already being commissioned, and we’re progressing steadily. Our goal is to have the final batch delivered by December this year. As we receive new equipment, we will commission it and integrate it into our operations.

So, I believe I can confidently say that one year from now, even with the last batch arriving in December, we should be operating at full capacity, turning these equipment acquisitions into a significant change for South Africa’s ports.

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JEREMY MAGGS: That’s encouraging long-term news. However, in the short term, Transnet still faces ongoing issues, including discussions about a potential R50 billion bailout, which would represent the largest financial risk for the government in 2025. Are you able to implement changes swiftly enough?

SANDILE SANGQU: It’s fair to say that when dealing with the complexities at Transnet, which are multilayered and multidimensional, we must concentrate on key issues, addressing them thoroughly and ensuring they run effectively.

Thus, our focus is on our ports to ensure we make the right investments in equipment.

However, equipment alone will not reverse the situation; we must also foster the right workplace culture, enhance productivity, train staff, and provide suitable incentives for our workforce.

We believe that if we can achieve this, it will generate new momentum, as success tends to breed further success.

While addressing larger systemic issues within Transnet is crucial, we must maintain a disciplined approach and effectively execute small segments of our business to get them operating smoothly.

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JEREMY MAGGS: Lastly, given that investors and stakeholders are watching closely, can you assure us that the turnaround plan remains viable and won’t necessitate further bailouts soon?

SANDILE SANGQU: It wouldn’t be accurate to state that. We have always acknowledged that executing this recovery plan fully will necessitate capital, and we’ve been transparent about that from the beginning.

The capital will come from a mix of equity and private sector investment, and we are currently developing a framework to balance these needs effectively.

Therefore, I cannot categorically state that we will fully implement the recovery plan without additional financial backing.

JEREMY MAGGS: Thank you very much. That was Andile Sangqu, chairperson of Transnet. I appreciate your time today.

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