Changing port logistics in SADC
South Africa’s harbours are inefficient and unreliable. After a decade of neglect, government is finally implementing a plan to turn around the situation by attracting private sector investment. But the initiative may well be too little and too late.
The port of Durban is still the Southern African Development Community’s (SADC) main gateway to the world. It carries about 60 percent of the trade to and from South Africa and services a large portion of inland Southern Africa. But Durban, along with other South African ports, has faltered badly after a decade of underinvestment and is now vulnerable to competition from other harbours with regional ambitions.
Interruptions to the Durban’s operations have become almost endemic. During the five weeks of Covid-induced hard lockdown in March-April 2020, almost all trade ceased which forced miners in the Central African copper belt to look for alternative export routes. While much of Zambia and the Democratic Republic of Congo trade was once conduced via rail, the development of a highly competitive trucking industry over the last 30 years has seen this mode of transport almost completely displace rail on SADC’s North-South corridor.
As the basis of the biggest single industry in SADC, outside of South Africa’s major industrial and mining nodes, the Central African copper belt is a critical part of regional development. If the African Continental Free Trade Agreement’s vision of enhanced linkages between the continent’s national economies is to be realised, it needs to be better integrated into the global and regional economies.
In recent decades, this has thrown the focus onto the Port of Durban. The colonial copper export link via the Benguela Railroad with its terminus at Lobito in Angola was severed by the Angolan civil war. The Tazara line from the copper belt to Dar es Salaam, built by China in the 1970s to avoid trading through then apartheid South Africa, never functioned at planned capacity (5 million tonnes per annum) and now suffers from heavily dilapidated infrastructure.
But Durban has continued to struggle even as the pandemic was waning. It was forced to declare force majeure twice in 2021, once as a consequence of the July civil unrest, which severed the N3 logistics corridor – which links it to Gauteng and then on to the rest of the sub-continent – and then again at the end of that month by a cyber attack which left its IT systems inoperative. In April 2022, the port was once again closed, this time by heavy flooding which necessitated a complete 36-hour shut-down and rendered the main container access point, Bayhead Road, unusable due to a sinkhole. Between these closures, the N3 corridor had also been repeatedly shut down by truck drivers protesting against the employment of foreign nationals.
Durban’s woes are part of a pattern affecting South Africa’s harbours more generally. Coal exports from Richards Bay were lower in 2021, than any year since 1996 because of inadequate rail capacity. Capacity problems at Saldanha Bay (iron ore) and Gqeberha (manganese), meant massive opportunity costs for the South African mining sector during a year where some commodities achieved all-time record prices. The Minerals Council of South Africa estimates that trade valued at R35 billion was lost.
In the World Bank’s 2021 Container Port Performance Index, South Africa’s four container ports were ranked in the bottom five of the 351 harbours listed, well below their African peers. Transnet has argued that this ranking is an aberration because the assessment period included the time of the Covid lockdown when no business was being conducted. There may be some truth to this assertion but it is difficult to gainsay a World Bank specialist’s view that ‘quite honestly (South African ports) are just not efficient enough’.
The struggles of South African ports offer opportunities for other regional operators. Walvis Bay has worked on corridor development, and port efficiencies and infrastructure for more than 20 years. It appears to be receiving increasing volumes of business from the Copperbelt. Last year, Konkola Copper Mines in Zambia announced that it would be exporting 105 000 tonnes of copper through Walvis Bay.
Not only is Walvis Bay exporting bulk but also processed copper products. 8 500 tonnes of copper cathodes from Mopani Mine, also in Zambia, were exported to Panama last year, reportedly the second such cargo. The cathodes were transhipped in breakbulk format, an alternative to sending them by container.
Walvis Bay would consolidate its hold on the copper belt trade if it were linked to central Africa by rail. The recent news that a feasibility study has found that a 770 km link between the Namibian and Zambian rail networks would be commercially viable is thus positive news for the port.
However, Walvis Bay may not have the copper belt to itself. Plans are in progress to re-open a refurbished Benguela Corridor, linking the port of Lobito in Angola to the copper belt. The Angolan government intends offer the harbour on concession at some point this year. The line was rehabilitated by the Chinese Rail Construction Corporation between 2006 and 2015.
On the other side of the sub-continent, there are also big developments afoot in Maputo harbour. Among other developments, South African logistics firm Grindrod, which holds the concession, is planning to triple the export capacity of the Maputo dry bulk terminal in the medium term. Maputo competes directly with Durban for Gauteng and Mpumalanga trade. It is not inconceivable that in the longer term it could export as much as a quarter of South Africa’s coal production while also being competitive in the container and breakbulk spaces.
The South African government has plans to concession part of Durban harbour, to offer private third-party operators six rail container slots on the Gauteng-Durban line and to introduce a dedicated copper theft unit which could play a role in policing the Richards Bay coal line. But none of these proposals have yet been implemented and problems have already emerged. The two-year rail term of the container slot concession is widely held to be too short to attract serious investment.
In the meantime, Durban remains congested, inefficient and expensive. This offers a clear window of opportunity to Walvis Bay, Lobito and Maputo, among others. Durban’s loss could well be their gain.
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