Transnet Selects ICTSI as Equity Partner for Durban Container Terminal Upgrade

Transnet SOC Ltd (Transnet), South Africa’s state-owned freight transport and logistics company, has announced the selection of International Container Terminal Services Inc. (ICTSI), a leading international terminal operator, as the Preferred Bidder for the joint venture to develop and upgrade Durban Container Terminal (DCT) Pier 2. The partnership aims to reposition the terminal as a container hub port and improve operational efficiency.

DCT Pier 2 is Transnet’s largest container terminal, accounting for 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic. With the selection of ICTSI, Transnet expects to leverage the global expertise and standing of the company to drive the repositioning process.

Portia Derby, Transnet Group CEO, expressed her delight at having ICTSI on board and emphasized the importance of private sector participation in Pier 2 as a catalyst for the Port of Durban’s transformation. The partnership with ICTSI will facilitate best practice performance, stimulate growth in volume throughput, enhance operational and commercial support for accessing global shipping routes, and play a significant role in stimulating exports and imports.

The selection of the equity partner follows approvals from the government under the Public Finance Management Act (PFMA). This step represents Transnet’s strategy to engage global expertise to improve efficiencies at its terminals and encourage private sector participation in identified areas of growth.

The process began in August 2021, with 18 responses received to Transnet’s call for interest, including nine from global terminal operators. Following a request for qualifications, 10 bids were shortlisted, and ultimately, six bidders submitted proposals.

Key elements of the transaction include the formation of a new company to manage operations at DCT Pier 2, with Transnet holding a majority ownership stake of 50% plus one share. The initial term of the joint venture is 25 years, with a possible extension of up to 30 years if the berth deepening of the North Quay at Pier 2 is delayed. Non-current assets, customer and supplier contracts, and the terminal operating license and lease will be transferred to the new company. The company will be required to achieve a minimum Level 4 Broad-Based Black Economic Empowerment (BBBEE) contribution status.

Importantly, the partnership ensures job security for DCT Pier 2 employees. They will be seconded to the new entity, retaining their existing terms and conditions, and there will be no retrenchments.

Transnet’s next step will be to work with ICTSI to implement the transaction through the execution of legal agreements while ensuring compliance with all legal and regulatory requirements. Further plans for the Ngqura Container Terminal process will be outlined in due course.

The selection of ICTSI as the equity partner for the development and upgrade of DCT Pier 2 marks a significant milestone for Transnet’s growth strategy. The collaboration is poised to enhance the competitiveness of the Port of Durban, improve logistical services, and position South Africa as a key player in international trade.