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South Africa's state-owned Transnet SOC has selected International Container Terminal Services Inc. (ICTSI) from the Philippines to be its equity partner in the Durban Container Terminal (DCT) Pier 2 in KwaZulu-Natal.

ICTSI will form a 25-year joint venture with Transnet Port Terminals (TPT) to develop and upgrade its DCT Pier 2. 

DCT operates as two terminals, Pier 1 and Pier 2. It serves as a hub for containerised cargo from the Indian Ocean islands, the Middle East, the Far East, and Australia.

DCT Pier 2 is Transnet’s biggest container terminal, handling 72% of the Port of Durban’s throughput and 46% of South Africa’s port traffic. 

“Private sector participation in Pier 2 is a key catalyst for repositioning the Port of Durban as a container hub port. We are delighted to have a global player of ICTSI’s standing on board to drive this process,” said Transnet Group CEO Portia Derby.

The immediate plan is to increase Pier 2’s handling capacity from 2 million TEUs to 2.8 million TEUs. Transnet National Ports Authority (TNPA) further hopes to increase the current container capacity in the Port of Durban from 3.3 million TEUs to an eventual 11.4 million TEUs.

“The partnership in Pier 2 is a major step forward for our programme to bring in global expertise to improve efficiencies at our terminals and bodes well for our ongoing plans to crowd in the private sector in areas identified for growth,” added Derby. 

A total of 18 responses were received following Transnet’s initial call for interest in the DCT Pier 2 equity partnership in August 2021, including nine from global terminal operators. Ten bids were shortlisted and six bidders submitted proposals, with ICTSI now officially named as preferred bidder.

Key elements of the transaction are:

• A new company will be formed to manage the operations at DCT Pier 2, with Transnet having majority ownership of 50% plus one share.
• The term of the transaction is 25 years, with an optional extension to a maximum of 30 years if the berth deepening of the north quay at Pier 2 is delayed.
• Non-current assets will be transferred into the new company, along with customer and supplier contracts. The new company is required to achieve a minimum level 4 BBEE contribution status.
• The terminal operating license and lease will be subcontracted to the new company, after approvals from TNPA.
• DCT Pier 2 employees will be seconded to the new entity. There will be no retrenchments, and employees will retain the same terms and conditions before and after the introduction of the private sector partner.

ICTSI operates 34 terminal operations in 20 countries, including four in Africa.

Transnet is also in the process of appointing an equity partner for Port Elizabeth’s Ngqura Container Terminal in the Eastern Cape.

The four shortlisted groups are: APM Terminals AMI Management DMCEST; Red Sea Gateway Terminal and MMC Port Holdings; Star Classic Investments Limited and Abu Dhabi Ports; and Terminal Investment Limited and REMGRO Limited.

Photo: Durban Container Terminal (Source: Transnet)