Finance and Economic Opportunities

In relation to the Port of Cape Town introducing the Transnet National Ports Authority’s new operating model:

[1]      How effective are the new measures that have been implemented at the Port to increase efficiency;

I am advised that the new TNPA operating model can be described as follows:

a] The objectives are to provide port infrastructure and customer services that would enable economic development and ensure efficient performance, including on-time berthing and sailing;  

b]  Terminal oversight, including the monitoring of global best practice terminal performance indicators, such as vessel and truck turnaround time;

c]   Lowering the cost of doing business and improving communication with port users;

d]   Revitalising the ship repair industry; and

e]  Decentralizing executive management to regions that include the Western Cape

Insofar as infrastructure at the Port is concerned, our primary concern relates to expenditure performance. For example, capital expenditure by TPT was R500 million below budget in 2020/21[1] These spending rates on capital budgets will need to be addressed over the short-term for efficiency to improve.

On our initial analysis of recent capital expenditure announcements by TNPA, many of the projects have been in the pipeline for some time already. What is now required is improved capital expenditure rates of these projects, with the bulk of the capital expenditure “front loaded” over the next three years, and not the outer years (year 6 and 7), as currently planned.

Smart “front-loading” of the capital investment spend in this way will make a notable difference in the experience of exporters and importers. We know, for example, that the difference between a high-growth and a low-growth scenario for the Cape Town container terminals could be as much as R5 billion in gross value added, and over 19 000 jobs.

Another area of concern is the lack of private sector participation in the Port, despite this being an Operation Vulindela priority by President Cyril Ramaphosa. We have accordingly escalated our concerns to the National Government so that this may be remedied as soon as possible. The involvement of the private sector is key to improving efficiency in the Port as soon as possible.

As it stands, inefficiencies are severe, as set out by TPT[2]:

• There has been a decline in container moves per ship working hours in Cape Town Container Terminals from 45 in 2019 to 38 in 2020 and 36 in 2021.The target for 2020 and 2021 was 50 container moves per ship working hour.
• In the first semester of 2021/22, there has been 33 moves per hour.
• There has been a decline in container moves per gross crane hour, from 22 in 2019 to 17 in 2021. The target for 2021 was 24.

The result is that the Port of Cape Town is now ranked 365 out of 370 ports in the World Bank’s Container Port Performance Index Report 2021.

However, I have been heartened by TNPA and TPT’s spirit of collaboration and willingness to work with stakeholders to address concerns. This has enabled short-term interventions which have assisted from day-to-day, including:

• The addition of the Liebherr 600 mobile harbour crane to the equipment fleet at the Multi-Purpose Terminal in December 2021, which got the Multi-Purpose Terminal back online;
• The installation of the hydraulic shore tensioning system in April 2022 in one berth at Cape Town Container Terminal to reduce delays caused by ranging [ship movements caused by wave surges];
• The activation of one additional berth;
• The re-introduction of operator incentives in April in 2022, resulting in improved performance; and
• The terminal will no longer close on public holidays, except for Workers Day, which will increase the Port’s capacity.

[2] Prominent matters that are raised by shipping lines about the Port of Cape Town include:

The prominent matters that were raised by shipping lines include:

• Delays caused by the step down to a 2-berth operation in Cape Town Container Terminal since the end of 2021. Three vessels have been berthing since Friday 15 July 2022, but the rate at which these vessels can be turned around is constrained by equipment availability;
• Vessel delays at anchorage and berth are caused by breakdowns of heavy lifting equipment in the Transnet container and multi-purpose terminals. This situation has improved in the Multi-purpose terminal since the deployment of a new mobile harbour crane in December 2021, but additional interventions are needed;
• Restrictions on certain tanker vessels to berth at night;
• Marine delays, including the unavailability of tugs at appointed times, were raised in the past. However, this situation has reportedly improved since the introduction of the new TNPA operating model.

[3] The Department is facilitating the continued improvement of the Port’s ability to process shipments through a collaborative approach that has the following focal areas:

The Department's current approach regarding how to improve the Port’s ability is as follows:

• Arranging and hosting an annual stakeholder workshop for all primary agencies in the port logistics chain to identify and discuss priority interventions for improved port capacity and performance. Three such workshops have been arranged to date, all of which were hosted by the provincial Minister for Finance and Economic Opportunities.
• Seconding ease of doing business project manager to address the 12 joint priorities that have emerged from the stakeholder workshops and that are listed below:

1.  Terminal equipment augmentation and improved maintenance
2.  Integrate data on container movements to synchronize planning and prevent avoidable bottlenecks in terminal
3.  Improve transporter turnaround time and provide truck staging facilities with ablutions
4.  Synchronization of working hours and processes among agencies in the logistics chain to improve efficiency, including better utilization of the night shift, where capacity is available
5.  Improved communication in the Port logistics chain to reduce avoidable delays
6.  Better utilization of NAVIS cargo management IT system. Estimating the cost of doing business in the port and systematically reducing this cost
7. Strategy alignment among major agencies concerning the Port, including WCG, City of Cape Town and Transnet
8. Unlocking the economic growth potential of ship repair and yacht building in the Port of Cape Town
9. Developing BELCON  and other Inland Port Terminals
10. Facilitating advanced skills development for vessel planners and operators of heavy lifting equipment
11. Advocating for best practice performance indicator measurement across the entire logistics chain.

Action research is conducted to the extent that evidence is needed to make progress with the priorities.

• Stakeholder liaison and case-based approaches are taken to address specific concerns of port users that they feel they cannot resolve directly with Transnet or with the shipping lines. If justified by the case, DEDAT will play the role of the intermediary and represent the business person in engagements with Transnet or the shipping lines.
• In addition to these focal areas, DEDAT will be engaging with the Ports Regulator on best practice container terminal performance indicators and with the Presidency on escalating the Port of Cape Town to an Operation Vulindlela priority.