Aug 25, 2016: Slow economic growth and commodity price decreases have dampened prospects for trade growth in South Africa. These conditions have delayed improvements to the infrastructure at the Port of Durban, which handled around 65 percent of the country’s bulk freight.

But the transportation consultancy BMI in a recent report says there remains a strong business case to carry out more upgrades at the port, “particularly those necessary to meet the export and import needs of the country’s economic hub Gauteng and markets in southern Africa.”

Transnet, the South African transportation concern that runs the Durban port, is interested in easing congestion at the port to ensure it remains cost-competitive and that South Africasustains its strong logistics profile in Sub-Saharan Africa and globally.

Congestion at the port is one of the main risks to investors, according to BMI, resulting in delays lasting from several hours to a few days. “Transnet is also eager to increase the port’s capacity to accommodate liquid bulk shipments to avoid a shortage in refined fuels—particularly in Gauteng,” said the report, “and the subsequent increase in fuel import costs.”

BMI remains upbeat on Transnet’s ability to execute its plans at the port, despite current market conditions. “It is in a fairly strong financial position,” the report noted, “to execute its plans and we maintain its manageable debt load will keep borrowing costs accommodative.”

BMI expects port investment to provide critical support to overall construction industry growth in South Africa over a 10-year forecast period, at an average annual growth rate of 2.7 percent.

Upcoming projects at the port include increasing the container capacity of the Port of Durban, from 3.9 million TEUs) to 4.6 million. That project will include widened and deepened entrance channel and deepened berths at Pier 1 the Durban Container Terminal (DCT) to accommodate larger vessels. Work on this project is expected to begin in 2018 and conclude in 2023, raising capacity from the existing 700,000 TEUs to 2.4mn TEUs. The widening of berths 203 to 205 at Pier 2 of the DCT will expand the existing capacity of 2.9mn TEUs. Work is expected to commence in 2017 and conclude in 2022.

There will also be an expansion of a portion of Maydon Wharf into a new container terminal for smaller vessels, involving the reconstruction and deepening of six out of 15 berths in that location.

There are also projects focused on increasing the liquid bulk capacity at the port’s Island View section, by deepening existing berths and constructing a coastal terminal for the new multi-product pipeline to Gauteng, due to be fully complete by November 2016. Berths 1 and 2 have been earmarked forupgrading, while in July 2016 Transnet issued a request for proposal to develop a liquid bulk port terminal on a public-private partnership basis.

“With South Africa a net importer of fuels,” the report noted, Transnet “is seeking to close the gap between production and consumption in order to avoid potential shortages and an increase in fuel imports.”

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