TRANSNET UNDER PRESSURE AS IT MOVES TO PRIVATISE CONTAINER CORRIDOR

Transnet is facing increasing pressure from both the African National Congress (ANC) and Economic Freedom Fighters (EFF) political parties with respect to its current activities and privatisation plans.

At the end of January 2023, Transnet announced it was engaging the market to invest in and grow Transnet Freight Rail’s (TFR) freight containerised business, by issuing a Request for Qualifications (RFQ) to identify parties interested in entering into an Operating Lease with TFR for the operation and maintenance of the Container Corridor (the line between Johannesburg and Durban) for a period of 20 years.

The Operating Lease aims to obtain the required investment in the rehabilitation, upgrade and maintenance of the rail network and rolling stock assets, as well as be responsible for the operation of the Container Corridor, which includes the Bayhead Back of Port Terminal and defined Inland Terminals of City Deep, Kascon and Bayhead.

However, Members of the South African Parliament are critical of the project and have made their sentiments known following a recent presentation from Transnet to the Public Enterprises Portfolio Committee about its recently announced plans.

The views were best summedup by Judith Tshabalala, ANC Member of the Committee, who stated: “The ANC government is ridiculed by the public and

Russian Coal Move

Russia is reportedly considering the option of shipping coal from Siberia to Asia, via the Arctic river, and using the ports of Krasnoyarsk and Lesosibirsk. Pilot shipments could commence during Summer 2023. It is understood that the coal would be shipped via the River Yenisei to the port of Dudinka for reloading onto larger ships for movement via the Northern Sea Route. Timber is another product that is under consideration.

COSCO in Sokhna

voters, who say we have failed. But you run these entities. You are responsible for implementing government policy. The ANC government never told you to privatise anything… I’m not finding much you have done to turn around the situation. Fix up this mess you are creating for the ANC government.”

In response to this public criticism, Portia Derby, CEO, Transnet Group, maintains that a number of critical challenges continue to be faced, citing the unavailability of spares for locomotives, theft, and vandalism and “systemic underinvestment,” all of which has seen a reduction in system reliability and an increase in accidents.

Talking to the Committee she further noted that the support of the private sector, and the investment it will bring, is needed to help generate a significant shift of containers from road to rail as well as achieve increased

8 Transnet’s desire to privatise its rail containerised business continues to face political opposition from South Africa’s governmental authorities operational reliability and efficiency. The concessionaire must invest at least R3 billion in the infrastructure.

Furthermore, Derby said that Transnet lacked the financial resources to utilise the full capacity of its network: “Total available capacity is 230 megatons a year, and we are not able to move it ourselves. From a South African perspective, and even from a Transnet perspective, it is really important that we are able to move it. So, if other people can enable us to move cargo then it is essential that we bring them on.”

Privatisation has long been on the agenda in South Africa for the port business, but to date it has seen little tangible traction. The current political climate could see further delays.

Long Beach Wind And Rail Initiatives

The San Pedro Bay Port of Long Beach, in Southern California, is considering the development of a 400-acre wind turbine facility.

Mario Cordero, Executive Director, Port of Long Beach, has announced details of a new proposal that includes development of a manufacturing base capable of producing floating wind turbines, as part of the port taking a “leading role in becoming…a renewable energy developer.” The 400 acre site will be on new land southwest of Long Beach International Gateway Bridge.

At the same time, the port has also confirmed that the US$1.5bn Pier B rail project will break ground in 2024, in a move that will help speed containers from the port to destinations in the US Midwest and help overcome supply chain issues seen in 2021-2022. “In the first phase of Pier B in 2025, you will see additional tracks that will improve the entering and leaving of the Port of Long Beach. Ultimately, we will have completed, by 2032, the enhancement of going from the number of tracks that we have today, which is 11 tracks to 46 tracks. So, it’s going be a huge game changer,” stated Cordero.

COSCO Shipping Ports has confirmed it has signed a deal to acquire a 25 per cent stake in the 1.7 million TEU per annum Sokhna New Container Terminal being developed by the Egyptian government. In a filing to the Hong Kong stock exchange, the company said the US$375 million investment is for a 30-year agreement. CMA CGM and Hutchison Ports are partners in the US$1,6bn deal. Located at the southern entrance to the Suez Canal, the Port of Sokhna is approximately 120km east of Cairo.

Urgent Action Required

The UK’s Floating Wind Offshore Wind Taskforce states that up to 11 ports in the UK need to be transformed into new industrial hubs to support the roll-out of floating offshore wind activities and as fast as possible. The Taskforce projects that 34GW of floating wind can be installed by 2040, but only if the UK government takes “swift and decisive action”. With the UK having the biggest wind project pipeline globally at 37GW, investment of £4bn (US$4.85bn) must occur in ports by 2030.