Port terminals – the interface between the ship and the shore, or where trans-shipment takes place between ship and ship – are critical to the conduct of seaborne trade worldwide.
The terminal operator offloads from one mode of transport (ship, train or truck) and temporarily stores or reorganises the goods for transfer to another mode (ship, train or truck). While the task is a simple one in many ways, things can go wrong.
There is broad public consensus that our port terminal operations could work better. Where there is no consensus is on how they can be improved. There also appears to be no agreement on which terminals need fixing.
South African Port Operations (Sapo), a division of the transport parastatal Transnet, is the operator that moves 48% of the volumes through the terminals of our seven commercial ports. It particularly dominates the movement of container loads.
The remaining 52% of volumes is moved by private terminal operators such as Richards Bay Coal Terminal. Both Sapo and the private terminal operators have lease agreements with the port landowner, Transnet’s National Port Authority.
The government’s stated intention is to concession the terminals currently operated by Sapo to private operators. Concessioning involves the signing of long-term operating lease agreements, which usually include some commitment to invest, as well as an agreement to pay a concessioning fee. The fee is sometimes paid upfront, sometimes annually.
The government’s plan is to start with Durban’s container terminal, the largest in Africa, currently operated by Sapo.
The position of the Congress of South African Trade Unions’s South African Transport and Allied Workers Union (Satawu), shared by the two Federation of Unions of South Africa unions also organising in the ports, is that port concessioning must be halted while consensus is sought through proper consultation and investigation.
If and when talks are finally convened, the issues on which Satawu wishes to engage the government are a full review of efficiency-related issues in the port operations of Sapo and private operators; projections of volumes and investment requirements; job retention and creation in the ports; the regulation of casual employment; the adoption of international labour standards; an assessment of the training requirements for port workers and management; and an assessment of the role of local capital and especially black empowerment companies, in current and future port operations and related activities.
We will have to examine expected patterns of export and import growth, as well as the implications of South Africa being outside the world’s three main trade routes. Assumptions are often glibly made about South Africa’s potential role as a trans-shipment location, or a gateway to other parts of Africa. But South Africa is not, in fact, geographically well placed to play this role.
Trends in shipping rates, combined with the increasing concentration of shipping capital, need to be analysed. Worldwide, only 10 shipping companies transport 50% of the 50-million containers carried by sea each year.
In South Africa this concentration is more marked, with one company — Mediterranean Shipping Company — carrying 40% of all containers that move through the Durban port.
Any restructuring of our ports must go hand in hand with a strategy for shipping, including giving consideration to support for national flag-carriers.
Once the issues have been thoroughly canvassed, the government and organised labour will be ready to weigh a range of restructuring options — including, but not limited to, the option of retaining Sapo’s operations or that of concessioning.
Both sides will have to take into account a range of international and national factors and trends.
It is significant that most of the world’s ports continue to be owned and operated by state companies. The “best practice” port of Singapore, often cited to highlight the alleged inefficiencies of our ports, is in fact owned and operated by a state-owned company, PSA.
We will have to examine the basis for the claimed success of the seven private Global Terminal Operators who handle 42% of container traffic in ports worldwide.
The shallow powerpoint assertions made by the government’s consultants in public presentations over the past few months will not do.
The monopolistic dangers of allowing an international terminal operator, or an international shipping company (also increasingly moving into terminal operations), to play a key role in the import and export of goods will have to be considered.
It will also be vital to assess how various restructuring options can broaden ownership in the South African economy. At the moment, the government appears to be thinking of a concession to international operators with a measly 15% empowerment component. There is no sign that further empowerment conditions will be imposed on the foreign concessionaires.
If Satawu is to choose between such an operation and Sapo, we have no doubt that the latter, a state-owned company, represents ownership by the wider populace.
The current market segmentation of our seven commercial ports, and the relationship of each port to the local economy, needs to be scrutinised. Part of weighing various restructuring options, this will make it possible to identify ways of leveraging local economic development through the ports.
The government’s quick-fix, satisfy-Treasury approach simply won’t work. It will infuriate workers, who are already mobilising for industrial action, and may lead to decisions that fail in the longer term to satisfy the need for well-run port operations and quality job provision.
Organised port workers are holding their breath to see if at a high-level meeting scheduled for May 12 the government agrees to engage the three trade unions.
Port users, the importers and exporters in our economy, should also sweating about the outcome.
Jane Barrett is policy research officer of the South African Transport and Allied Workers Union