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JEREMY MAGGS: South Africa’s ports are grappling with persistent inefficiencies, yet a substantial investment is set to reshape this scenario. Transnet has committed R3.4 billion towards modernizing its fleet, directing most of this funding to the Durban Container Terminal. If I’m correct, this investment aims to acquire over 100 new cargo handling machines, which will enhance operational capacity and may help resolve the backlog that has been plaguing the port for a while.
In line with its broader recovery strategy, Transnet seeks to strengthen infrastructure, boost efficiency, and create a more reliable supply chain for businesses that depend on port logistics.
Joining me now to explore this investment and its wider implications for Transnet and trade across Africa is Andile Sangqu, chairperson of Transnet. Welcome, Chairperson, and thank you for joining us. To begin, what prompted the decision to allocate such a considerable portion of your investment to Durban?
SANDILE SANGQU: Thank you, Jeremy. You may recall the significant congestion we faced in December 2023, which severely impacted our ability to move goods in and out of the country. A new board was formed in July 2023, leading to the approval of a recovery plan in October 2023.
A critical component of that plan is modernizing our port equipment and improving safety measures to ensure our ports are reliable, secure, efficient, and equipped with advanced machinery and technology.
This initiative began last year with the procurement of seven tugboats at an investment of approximately R1 billion, of which five were allocated to the port of Durban, while the remaining two went to Port Elizabeth [Gqeberha] and East London.
Read: Durban port gets a boost in container handling
Thus, this fresh investment accelerates our port enhancement initiative and addresses the systemic issues that resulted in the challenges we encountered in December 2023. This equipment will constitute the initial batch delivered throughout the year.
We’ve established a delivery timetable starting with Durban as of yesterday, and in March and April, we expect to receive similar high-quality equipment at the port of Cape Town, which will then spread to our other ports.
To answer your question, we are deliberately moving forward with our recovery plan to significantly revamp the functioning of our port system.
JEREMY MAGGS: I appreciate your focus, but some might argue that actions have been delayed for too long, particularly in Durban, which has faced dire circumstances for several years. What is the timeline for making all the new machinery operational and effecting real change?
SANDILE SANGQU: You’re correct, Jeremy. This should have been tackled earlier, yet I prefer not to dwell on past mistakes. What’s done is done, and we’ve all learned valuable lessons. I want to express my gratitude to our employees who have continued to maintain operations under challenging circumstances.
With the new equipment’s arrival, we anticipate an uplift in morale among staff and an improvement in customer satisfaction.
Ultimately, we expect this to have a positive influence on economic activities both within the port and in the wider economy.
Therefore, I confidently predict that in one year, even with the last batch arriving in December, we will be operating at full capacity, translating these equipment investments into substantial improvements for South Africa’s ports.
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JEREMY MAGGS: That’s promising news for the long term. However, in the short term, Transnet still faces numerous challenges, including talks of a potential R50 billion bailout, which would pose the largest financial risk for the government in 2025. Are you confident in your ability to implement changes quickly enough?
SANDILE SANGQU: It’s fair to say, given the multilayered complexities at Transnet, we need to focus on addressing key issues thoroughly and effectively.
Our priority remains on our ports to ensure we are making the right investments in equipment.
However, equipment alone won’t solve the problems; we also need to cultivate the right workplace culture, enhance productivity, provide staff training, and offer suitable incentives for our workforce.
We believe that achieving this will generate new momentum, as success tends to inspire further success.
While it remains crucial to tackle broader systemic issues within Transnet, we must adopt a structured approach and effectively manage smaller operational segments to ensure smooth operations.
Read:
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JEREMY MAGGS: Finally, acknowledging that investors and stakeholders are closely monitoring the situation, can you reassure us that the turnaround plan remains feasible and won’t require additional bailouts in the near future?
SANDILE SANGQU: It would be misleading to claim otherwise. We’ve always recognized that fully executing this recovery plan will require capital, and we’ve been transparent about this from the onset.
This capital will stem from a combination of equity and private sector investment, and we’re currently working to develop a framework that balances these requirements effectively.
Thus, I cannot categorically state that we can fully implement the recovery plan without supplementary financial support.
JEREMY MAGGS: Thank you very much. That was Andile Sangqu, chairperson of Transnet. I appreciate your time today.
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