Sun. Feb 9th, 2025

Bloomberg — A South African court has temporarily halted a significant agreement between Transnet SOC Ltd., the state-owned logistics firm, and International Container Terminal Services Inc. (ICTSI), owned by Filipino billionaire Enrique Razon. This deal aimed to expand and manage sub-Saharan Africa’s largest container port in Durban, a vital hub for trade and logistics in the region. The intervention follows a challenge from A.P. Moller-Maersk A/S, one of the world’s leading shipping companies, which raised concerns about the integrity of the award process.

Maersk’s subsidiary, APM Terminals, was among the unsuccessful bidders in last year’s competitive tender to sell nearly half of the main terminal in Durban and operate it for the next 25 years. In its legal challenge, Maersk argued that ICTSI did not meet a specified solvency measure required by the tender, thereby questioning the legitimacy of the selection process.

The Durban High Court’s issuance of an interim interdict against Transnet means that the deal cannot proceed until the court hears the next part of Maersk’s challenge. Transnet has acknowledged the ruling and stated its commitment to adhere to the judicial process, emphasizing that it is currently evaluating its options moving forward. The state logistics firm is committed to finding a resolution that complies with legal requirements while also addressing the operational needs of the port.

This court decision represents a significant setback in efforts to enhance the efficiency of South Africa’s ports, which have been flagged as among the least efficient globally in a World Bank study. The ongoing challenges at Transnet are exacerbated by a range of issues, including aging infrastructure, logistical bottlenecks, and the need for significant investment to modernize facilities. Transnet, which operates most of the country’s ports and freight railways, is under increasing pressure from the government and the business community to improve operations through private sector involvement.

Shipping giant Maersk, known for its substantial global presence, is the world’s second-largest container shipping company and Denmark’s largest by revenue. APM Terminals was identified as the runner-up in the bidding process, competing against other prominent firms such as COSCO Shipping Ports Ltd., DP World Ltd., China Harbour Engineering Company Ltd., and Guangzhou Port Co. Ltd.

The legal proceedings not only delay the port’s anticipated improvements but also highlight the complexities involved in attracting private investment to revitalize South Africa’s logistics infrastructure. Stakeholders are keenly observing how this case unfolds, as it may set a precedent for future public-private partnerships in the country’s transport and logistics sector. The resolution of this dispute will be crucial for the strategic plans aimed at enhancing port efficiency and boosting economic growth in the region.

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