Will public/private partnerships solve SA’s port problems?

by Denys Hobson. Public/private partnerships (PPPs) to upgrade port infrastructure could hold the key to solving port congestion, as well as stimulating high levels of investment in logistics infrastructure locally. There is no doubt the private sector feels encouraged by the remarks of South Africa’s President Cyril Ramaphosa in his recent State of the Nation (Sona) address, that put some timeframes to these PPPs.

There is undoubted urgency: port congestion and inefficiencies continue to hamper carriers’ efforts to adhere to routings and sailing schedules. Globally, schedule reliability hit an all-time low of 33% last year; while on average, late vessel arrivals increased to 7.33 days according to the Sea-Intelligence report. It does not help that on top of global congestion, South Africa has its own internal efficiency problems – and retail feels the impact.

International markets

Our ability to compete in global markets depends on the efficiency of our ports and rail network. This was highlighted by the President himself as far back as the Sona 2021 speech. Therefore, the answer to the question, ‘Will public-private partnerships solve SA’s port problems?’, is simply, yes – if best practices are implemented. This comes with the proviso that the PPP process itself isn’t bogged down with red tape and ineffectiveness – which will weaken confidence in the process and for future partnerships. The process and terms of partnership will need to be clearly defined and transparent. Building trust and confidence is going to be key. If the intentions behind creating a PPP are pure and both sides are aligned, then yes – we should see drastic improvements once tangible developments are implemented.

Global best practice

I believe Transnet has a great opportunity to access and leverage best practices and skills from the private sector. And the potential benefits to our economy are enormous – something which should excite all stakeholders. This is an extremely positive step by government towards improving the current challenges and inefficiencies in our port/rail infrastructure, and is an opportunity the logistics industry must embrace. It also represents a great opportunity to leverage off global best practices, and an opportunity for the industry to showcase their innovation in creating world class ports.

Successes here will also give direct support to the economy for the longer term – a port is a strategic asset that should be leveraged to support economic growth and be an enabler to drive efficient supply chains. Some of the typical benefits of PPS which benefit the broader economy, include:

• The opportunity to build confidence for future PPPs, as the concept can be expanded to any area where government is involved in the economy.
• A transfer of skills.
• It will improve the competitiveness and reputation of our exporters and importers.
• It creates jobs.
• It will enable South Africa to fulfil its role as the gateway for Southern Africa.
• It will install confidence for future investments from both local and international companies.

I do believe PPPs are the right way to go and there is support from the private sector to help make PPPs successful. The success of these partnerships will be a key driver to stimulating our economy and playing a major role in progressing our country across numerous fronts. The ball is in Transnet’s court now to take accountability and prove just how serious they are about improving our port and rail infrastructure, in order to become world class.

Main image credit: Unsplash.com.

Denys Hobson is a logistics and pricing analyst at Investec for Business.

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