R160 billion investment for Transnet – what the money will be spent on

 ·13 Feb 2024

Following an internal diagnostic review by Transnet at the end of 2023, there are plans to invest R160 billion to address the infrastructure woes plaguing South Africa’s port and rail industry.

On 23 November 2023, President Cyril Ramaphosa addressed the concerns surrounding the ailing state-owned logistics company Transnet – which was facing severe bottlenecks and delays at its ports across the county at the time.

The president admitted there had been a lack of maintenance of Transnet infrastructure and that the state-owned entity had failed to maintain a close relationship with its customers.

Between 23 and 30 November 2023, the Port of Durban reached a crisis point as equipment failures and bad weather led to a backlog of dozens of vessels and tens of thousands of containers.

The South African Association of Freight Forwarders (SAAFF) said that delays at ports have had direct costs to the South African economy of R98 million ($5.2 million) a day. At the same time, the movement of around R7 billion worth of goods had been impeded.

In January 2024, Transnet Port Terminals said a significant headway had been made to reduce the vessel backlog at the Port of Durban.

Despite this, experts – including Old Mutual Group chief economist Johann Els – noted that improvements in Transnet’s port operations were welcomed, but the significant backlogs of investments in rail and port operations meant that Transnet on its own would not be able to develop crucial transport infrastructure fast enough to support the economy.

In response to the need to address the ailing ports, Ramaphosa was optimistic that a positive change would occur following Transnet’s internal diagnostic process.

“The plans that we have for this precinct are plans of high quality, and there’s going to be a lot of investment – up to R160 billion,” he said.

Following this statement, the South African Government News Agency (SA News) provided an update on the government’s infrastructure plans and projects – including investment into Transnet.

According to SA News, the investment of R160 billion will be spent on addressing South Africa’s slow turnaround times at its ports, particularly in Durban.

“Following an internal diagnostic review by Transnet, there are plans to invest R160 billion to address the infrastructure.,” it said.

It includes procuring 16 gantry cranes and the acquisition of four ship-to-shore cranes to address slow turnaround times affecting the docking and offloading of containers at the port.

Transnet also plans to deepen and lengthen two berths at its Durban Container Terminal Pier 2, which handles about 65% of the country’s containerised cargo, as part of efforts to ease backlogs.

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