ICTSI is preferred operator for South Africa port

• International Container Terminal Services Inc. is the preferred bidder to operate and develop Durban Container Terminal Pier 2 in Durban, South Africa

• Transnet SOC Ltd. selected ICTSI over 17 other bidders for a 25-year joint venture with Transnet Port Terminals to operate and further develop DCT Pier 2

• A key element of the deal includes forming a new company to run DCT Pier 2, in which Transnet will own a majority of 50% plus one share

• DCT Pier 2 is Transnet’s biggest container hub, accounting for 72% of Durban port’s throughput and 46% of South Africa’s total cargo traffic

• Final awarding of the contract is subject to completion of legal agreements between Transnet and ICTSI

International Container Terminal Services Inc. (ICTSI) is the preferred operator for Durban Container Terminal (DCT) Pier 2 at the Port of Durban in South Africa.

In a regulatory disclosure on July 18, ICTSI said Transnet SOC Ltd., a South African state-owned firm that owns the country’s railway, ports and pipeline infrastructure, had announced ICTSI as the preferred bidder for a 25-year joint venture with Transnet Port Terminals (TPT) to operate and further develop its flagship, DCT Pier 2.

DCT Pier 2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s annual throughput and 46% of South Africa’s port traffic. The terminal has 1,760 meters of operational quay length and 120 hectares of container storage and backup area.

Final awarding of the contract is subject to completion of legal agreements between Transnet and ICTSI.

“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port. We are delighted to have a global player of ICTSI’s standing on board to drive this process,” Transnet Group chief executive Portia Derby said in a separate statement on July 17.

Transnet said the process will be finalized after the South African government approves the terms of the transaction in relation to the Public Finance Management Act.

Transnet said the partnership with ICTSI will “help reposition the terminal for best-practice performance, ensuring growth in volume throughput, and will support the terminal in providing operational and commercial support to access global shipping line call routes.”

This will not only improve the logistics associated with servicing South African ports, Transnet added, but will play a significant part in stimulating exports and imports.

This is a growth strategy for Transnet, where Pier 2’s current capacity of 2 million twenty-foot equivalent units (TEUs) is planned to increase to 2.8 million TEUs.

It is also aligned with plans by the Transnet National Ports Authority (TNPA) to increase the current container capacity in the Port of Durban from 3.3 million TEUs to an eventual envisaged capacity of 11.4 million TEUs.

“The partnership in Pier 2 is a major step forward for our programme to bring in global expertise to improve efficiencies at our terminals, and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth,” said Derby.

There were 18 responses in all to Transnet’s initial call for expression of interest in August 2021, nine of them from global terminal operators. A total of 10 bids were shortlisted from those who responded to a request for qualifications. Of the shortlisted respondents, six bidders submitted proposals.

Transnet said some key elements of the transaction include forming a new company to manage the operations at DCT Pier 2, which Transnet will be the majority owner with a 50% plus one share.

The term of the transaction is 25 years, with an option to extend it to a maximum of 30 years in the event that berth deepening of the North Quay at Pier 2 is delayed.

Non-current assets will be transferred into the new company, together with customer and supplier contracts. The new company is required to achieve a minimum level 4 BBEE (broad-based black economic empowerment) contribution status.

The terminal operating license and lease will be subcontracted to the new company after obtaining approval from TNPA.

Another key element is that DCT Pier 2 employees will be seconded to the new entity. There will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of the private-sector partner.

Transnet said it will now proceed to work with ICTSI to implement the transaction by executing the legal agreements and ensuring compliance with all legal and regulatory matters.

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