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South African harbours are expanding to prepare for the next upturnWhile shipping volumes are expected to continue taking a hit over (at least) the rest of this year due to the effects of the global economic downturn, upgrades and expansions in South African harbours are set to proceed in preparation for the next upturn.
State-owned Transnet Port Terminals (TPT) is in the process of a five-year R10.3-billion capital expenditure programme, with an emphasis on new and replacement equipment at its port terminals.
TPT’s chief executive officer Tau Morwe told a business-networking gathering in August last year that the creation of capacity ahead of demand would remain the focus of the agency, with container growth expected to double within the next eight years.
In the interim, Eric Heymann, senior economist at Deutsche Bank Research said in January that double-digit growth in container handling, which lasted for more than a decade, would end this year due to the decline in global gross domestic product (GDP).
Historically, container volumes track world GDP growth by a multiple of three, thus an increase of 12% in container volumes could be expected from the 4% growth in global GDP.
Jonathan Horn, Safmarine’s Africa region executive, was recently reported on the company’s website (www.safmarine.com) as saying they are expecting also a slower growth rate for the continent.
“The overall South African import market has shown several consecutive months of decline, largely as a consequence of the local credit crunch and several interest rate hikes over the past one to two years. This is naturally exacerbated by what is unfolding globally,” he said.
While South Africa accounts for 40% of the company’s volumes in Africa, there had been a significant slowdown in October and November last year. This is now filtering into many other African countries, he said.
Looking at the longer term, Morwe warned that underinvestment in port capacity and equipment could lead to ship and cargo congestion, such as was experienced in mid-2008 in Kenya and Angola. “With the lack of infrastructure investment in Africa, specifically in the ports sector, and with the vastness of the continent, we will continue experiencing problems in this area.”
He said that the only way to create capacity was around the concept of hubbing, and added that TPT would also continue to focus on developing its corridors leading to the port terminals, as this would – from an intermodal point of view – offer the right services for its customers.
In this regard, Transnet also announced late last year that it is considering introducing a container rail line to the port of Ngqura, which is earmarked to become operational in September this year.
Transnet has also increased the frequency of container trains between Johannesburg and Durban.
It was reported late last year that Transnet aims to raise rail volumes along these corridors from its present 181 million tons per year to more than 238 million tons by 2012/13. At the same time, Durban’s container terminal’s capacity had already grown from 1.8 million twenty-foot equivalent units (TEUs) per year in 2007 to 2.3 million TEUs in 2008.
In Cape Town, a R4.2bn container terminal expansion programme is also steaming ahead. The project was launched in January and will see the doubling of capacity in South Africa’s second-largest container terminal (after Durban). Whereas it could accommodate 740 000 containers at any given time in the past, it is anticipated that will be able to handle 1.4 million containers at the end of the project in 2012.
Work was also under way to allow larger vessels to pass through the Cape Town harbour – which, until now, was impossible. A key aspect of the project is the construction of a deeper terminal with new quay wall suitable for Super Post Panamax cranes with their twin-lift capacity.
The move from straddle carriers to using the much taller rubber-tyred gantry cranes is to allow the terminal to stack containers much higher than is presently possible. The first of this new-generation cranes are expected to arrive in Cape Town by mid-2009. Eventually, there will be 32 of these cranes operating in the harbour.
Andrew Thomas, CEO of the joint venture between Safmarine Container Lines and Grindrod – Ocean Africa Container Lines – was recently reported as saying that while there will be no growth or even a decline this year in the South African market, there is potential to attract transshipment.
This is possible because of the capacity created by Transnet. In the Durban port, only 20% of transshipment capacity is being utilised. When the port of Ngqura becomes operational later this year, it will create additional transshipment capacity.
In the meantime, as another sign that long term expectations remain strong, Durban Bulk Connections (DBC) made known its aspirations to build a new three-million-tons a year export facility at the Richards Bay port.
“We think there is a strong need for a small, independent bulk terminal facility to handle the boutique type of commodities like anthracite or sized coal which do not go through Richards Bay and which you don’t want to mix with the coal being handled at Richards Bay Coal Terminal (RBCT),” DBC managing director Iain Geldart told Reuters.
DBC handles around 2.5 million tons a year of various bulk commodities from its Durban facility, including 1.8 million tons of various coal types.
Much of the coal and anthracite exported from Durban could shift to the new Richards Bay facility, if it is built, said Geldart.
Despite the planned expansion of the privately-owned RBCT to 91 million tons a year which is due to begin ramping up in July, and proposed port expansions in Maputo and elsewhere in Richards Bay, there is insufficient thermal coal export capacity to meet demand, said sources in the South African industry.
The National Ports Authority, which leases land to private operators, issued a tender late last year for new developments at Richards Bay.
The NPA will choose between DBC’s proposal for a commodities terminal on the same side of Richards Bay as the Richards Bay Dry Bulk Terminal and a separate proposal from a consortium that wants to build a 10-million-tons a year coal terminal adjacent to RBCT on the other side of the bay.
South Africa exports around 65 million tons a year of thermal coal from RBCT and a few million tons of anthracite and sized coal from smaller ports.
Only one anthracite exporter is currently using Richards Bay Dry Bulk Terminal from which to ship, said industry sources.
Shifting anthracite exports away from Durban would enable more steam coal to be moved from there. Some traders and exporters are said to be already rushing to obtain steam coal export capacity at all of the proposed port expansions outside of RBCT.
