South Africa’s Maritime Sector: Growth, Green Tech & Global Competition

There is no doubt that the maritime transport sector is an important keg in the South African economic wheel. According to the Who Owns Whom report on maritime transport, over 80% of goods are transported by sea. South Africa’s geolocation positions it well for cost-effective sea transport for the import and export markets, making its harbours and ports essential for global trade and economic activity, more so than many other countries. There have been notable developments in the sector which has embraced new and green technologies and seems to have benefitted from initiatives like Operation Phakisa. Having said that, this industry has also experienced numerous challenges that require strategic and political interventions.

South Africa’s geolocation does not mean other countries don’t make as intensive use of maritime transport. On the contrary, as the image below shows, trade is interconnected (with the width of lines indicating traffic density), and there is no exclusivity to routes that pass South Africa:

Global maritime shipping routes, strategic passages and chokepoints

The status of the maritime industry in South Africa

The neglect of Transnet’s ports over several decades led to their gradual degradation, and slowing service and turnaround times continued for years without remedial actions, resulting in them being ranked at the very bottom of the World Bank’s 2023 Container Port Performance Index.

• Cape Town ranked last out of 405 ports (2022: 344).
• Ngqura ranked 404 (2022: 304).
• Durban ranked 398 (2022: 343).
• Port Elizabeth ranked 391 (2022: 291).

Cargo volumes also declined significantly as illustrated below.

Extended periods of underinvestment and no proper maintenance make it exponentially harder to catch up. 

Transnet has reached a stage where external help is needed to cope with the size of the problem. Like Eskom, it has moved into a death spiral. Numerous large customers were lost due to poor service to the extent that operations became loss-making. Transnet cannot raise its prices significantly to offset revenue from lost customers, as customers can simply find alternatives and use other ports for the services they need. An example is the Maputo harbour, which saw a massive increase in port activity after privatisation. It was unfortunately interrupted by post-electoral violence in the country, but remains a strong competitor for Transnet. 

Transnet also realised that excessive tariff increases have the opposite effect of the original goal, resulting in less customers and less use of services more than eliminating the higher income per service rendered.

Innovation, Investment and green transition 

The Who Owns Whom report on maritime transport refers to Naresh Sewnath, senior manager of pilotage and vessel traffic services at Transnet National Ports Authority (TNPA), who was quoted saying that South Africa is quite far advanced with the port system digital transformation, but there is still work to be done. This is a promising position, given the rising costs and competition from other means of transportation which have compelled the maritime industry to become more efficient, faster and environmentally friendly by adopting digital solutions.

Reuters reported on 9 September 2024 that the European Union pledged to give South Africa two grants worth about US$35m to accelerate its green hydrogen plans. The first grant of R140m (US$7.8m) is to help Transnet with infrastructure costs, supporting railways, ports, pipelines and other logistics.

Future outlook for the maritime industry in South Africa

The maritime industry in South Africa is on a recovery path that is propelled by the private sector and international private partners such as the Norwegian-based Klaveness Shipping Management, which has identified South Africa as its new source of next-generation sea staff after Romania and the Philippines, the latter supplying 400,000 sailors to the global fleet.

The country’s location on major shipping routes and access to renewable energy sources positions it as an ideal partner for foreign funders, and these investments can foster economic growth.  

While a niche market in maritime manufacturing, South Africa’s catamaran boat building industry is booming, and it is a significant exporter, even when only about 30% of the input materials are locally sourced, complicating logistics management and pricing stability. 

This success shows that the industry can succeed, but South Africa has to follow through on the numerous initiatives proposed, embrace private sector participation, and take the bull by the horns.