Transnet’s deteriorating performance is having a direct impact on the movement of bulk cargo in and out of South Africa.According to the 2022/2023 Port Terminals Report, bulk volumes decreased to 71.6 million tons (mt) in 2022/2023 – 4% below 2020 volumes.Bulk volumes dropped by over 1.5%, primarily due to equipment breakdowns, adverse weather conditions and rail supply issues, the report states.Public enterprises minister Pravin Gordhan was scathing in his response to the Transnet 2022/23 annual report, which showed a loss of R5.7 billion for the year.Gordhan pointed out that one of the key findings of the Auditor General’s report on Transnet for the 2022/2023 year was that operational inefficiencies were at the centre of the Transnet challenges, which impacted the company’s revenue.Broader impacts were poor service to different sectors of the economy, which had an impact on economic growth.“With only 26.3% of annual targets achieved, this poses a detrimental impact on our economic growth and global market competitiveness. This is unacceptable,” says Gordhan in his statement.Bulk volumes handled at Transnet terminals have been on a steady decline – 79.1 mt in 2020, 74.3 mt in 2021, 72.7 mt in 2022, and 71.6 mt in 2023. The target for 2023 was 82.5 mt, and for 2024 it is 81.4 mt.In its annual report, Transnet says “the overall bulk volumes faced a significant shortfall, ending the year 13.2% below the ambitious 2022/23 budget”.It adds: “There was a slight retreat from last year, with volumes declining by a mere 1.5%”.Iron ore hardest hitIron ore operations were hardest hit, ending 15.4% below budget due to a combination of weather delays and breakdowns of plant and equipment. “Rail reliability proved another stumbling block, as did disruptive industrial action.”Manganese exports through the Port Elizabeth Bulk Ore Terminal were 30.8% below budget, primarily due to cable theft and derailments affecting rail transport. “The effects of industrial strike action were keenly felt, as was the migration of skiptainer vessels to NCT (Ngqura) due to larger vessel parcels”.Magnetite and chrome volumes were below budget by “a substantial 38% and 29%, respectively”.One bright spotThe one bright spot is the Durban Agriport Terminal, which “rode on a wave of high demand for local grains and, driven by a favourable export programme, exceeded its budget by an impressive 35.4%”.Looking ahead, Transnet warns that China is looking at diversifying its procurement of iron ore. “South African exporters face a narrowing window of opportunity to capitalise on short- to medium-term supply-side constraints”.In order to meet the demand to move 28 mt of manganese a year by 2025/26FY, Transnet Port Terminals is using the ports of Saldanha, Port Elizabeth, Cape Town, and potentially Richards Bay and Durban.Dual channel approach“In the longer term, the strategy will transition to a dual channel approach through the ports of Ngqura and Saldanha, with plans in place to develop a 16-mtpa capacity facility at the former,” it adds.Magnetite demand is projected to remain consistent. “This stability is reinforced by producers in Phalaborwa, operating three beneficiation plants and ensuring a guaranteed demand for logistics services.”With China being the largest consumer of chrome ore, the demand will depend on the state of the Chinese economy. “Demand for export coal from Europe is expected to remain consistent for the year as the continent supplements their energy mix as part of mitigating the risk of a significant disruption in their supply of electricity. “India is expected to remain one of SA’s top coal export destinations as the country seeks to increase its manufacturing output and power generation infrastructure,” the report adds.
