Transnet: green shoots amidst delays

Durban Container Terminals (DCT) has taken delivery of an R892-million fleet of new equipment as part of Transnet’s ‘Recovery Plan’. The new straddle carriers and rubber-tyred gantry (RTG) cranes are only the beginning as Transnet expects additional ship-to-shore cranes, haulers and trailers by the end of the year.

Transnet Leadership are however confident that the delivery of new equipment will be a ‘game-changer’ for its operational efficiencies.

The recovery plan includes an investment of R3.4 billion in the 2025 financial year to improve Transnet’s equipment offering and enhance operational efficiencies.

Speaking on a panel at the Investec Economic Reform Conference on March 4th, Transnet CEO Michelle Phillips highlighted the significance of the delivery of the new equipment and its role in enhancing staff capabilities to improve operational efficiencies.

Up until now,  Transnet staff have been struggling and operating the port with aged infrastructure so this delivery is a positive in terms of progress of dependable, efficient equipment and infrastructure. In the 2023/2024 financial year, the Durban Port Pier’s 1 handled 1.7 million TEU’s representing the majority of SA’s container volumes.

The improved equipment will enable the port to achieve its target of handling more than 2 million TEU’s per annum and is a positive move for South African imports.

International Container Terminal Services Inc. (ICTSI) won the bid to operate Durban Container Terminal 2 in 2023, planning a $580 million investment for a 49% stake. However, legal proceedings initiated by the losing bidder, Maersk, have delayed development.

Transnet opted not to appeal the October 2024 interdict that temporarily halts the deal, with the next hearing scheduled for March 2025. The outcome could lead to vital investments to improve South Africa's supply chain infrastructure.

Shanghai-Durban freight rates stabilise

Freight rates from Shanghai to Durban have shown signs of stabilisation, with an average reduction of USD 400 over the past month.

In the air, freight demand is on the rise, driven by the expansion of e-commerce and ongoing disruptions in ocean freight. This increase in airfreight demand is contributing to higher global air cargo spot rates.

AGOA in jeopardy

The African Growth and Opportunity Act (AGOA) has been a fundamental aspect of South Africa’s trade partnership with the United States. The AGOA offers duty-free access to US markets and bolsters essential economic sectors like agriculture, automotive and manufacturing, and the loss of its benefits could have significant economic consequences.

The geopolitical tensions and trade wars prompted by the Trump administration places South Africa’s AGOA qualification at risk and creates uncertainty in global and South African supply chains. 

Recovery in Suez Canal traffic

The Suez Canal Authority in Egypt has reported that 47 ships have traversed the canal since early February. This marks a tentative recovery following the ceasefire between Israel and Hamas. The ceasefire has led to a major reduction in assaults on ships in the Red Sea by Yemeni rebels.

However, despite this progress, shipping lines remain reluctant to reroute through the Red Sea as they grapple with a combination of geopolitical risks, safety concerns, operational challenges and cost.

We anticipate that this transition will be gradual as the global shipping environment evolves and the risky situation at the Suez Canal subsides. 

Demand surges as businesses ship before tariffs kick in

The volatility caused by the US trade wars has led to significant increases in port activity. In early February, the Shanghai port reported that its container terminal complex surpassed a monthly throughput of over 5 million TEUs (twenty-foot equivalent units). This is a result of businesses rushing to ship goods in anticipation of new tariffs on Chinese products entering the US.

However, due to the lengthy logistics disruptions experienced over the last year, shipping lines have expanded their capacity by introducing new vessels and adjusting shipping routes.

Consequently, we do not anticipate significant disruptions to global supply chains in the short term as the industry is able to absorb the surge in demand.

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