The South African government is looking to privatise state-run ports in a quick fix aimed at tackling spiralling demand and operational difficulties. Yet the concessioning approach under consideration could actually exacerbate the problems, says Jane Barrett

South Africa relies heavily on its ports for the movement of exports and imports, as our geographic location dictates that most goods move by sea.

The South African maritime industry has a huge turnover. Freight earnings of domestic and foreign ship owners were equivalent to US$2.3bn in 1999, and revenues earned by port operators are around US$9.5bn per year.

Add stevedoring, freight forwarding, ship repair, ship chandling (supplies), the bunker trade (fuel), and seafaring, and the true size of the industry becomes apparent. In 2000 the industry employed 28,500 people (excluding fishing and the South African Navy). SA Port Operations (Sapo) employs 8,000 people, making it the biggest single employer.

Many observers are of the mistaken belief that all goods that move through our ports are handled by the state-owned Sapo. Private quayside operators actually handle 52 per cent of cargo (by weight) in South Africa's ports. They dominate the bulk and breakbulk operations such as coal and grains. Sapo, on the other hand, dominates the handling of containerised cargo. Containerised cargo tends to be of high value, making container terminals strategic and potentially lucrative.

There has been a phenomenal growth in exports and imports, both by value and by tonnage since 1994, placing pressure on all of our ports, but especially the container terminals. In Durban, vessel arrivals almost trebled between 1994 and 2000. Container traffic in and out of Durban Container Terminal (DCT) has been increasing by an unprecedented seven per cent per annum. DCT handles 66 per cent of SA's containerised cargo.

The scale of the increase in volumes was not predicted by anybody, including government. All port operators, but especially Sapo in its container operations, were therefore caught off guard.

Crisis measures

Desperate attempts have been made by management and workers alike to cope with the massive volumes, especially in DCT. Workers have worked 12- hour shifts for long periods and casual employment has increased. Incentive bonuses have been introduced, there is a new computerised cargo planning and control system, training has been improved, and new managers have been appointed. But none of this has been enough to deal with volumes that outstrip capacity by 26 per cent. There remain many obstacles to dealing with the new container volumes.

Some of the obstacles are: a 24-month delivery time on urgently required new straddle carriers to move containers in the terminal; the shipping companies, who do not always give accurate information about ship arrivals; and weaknesses in the marine services (pilotage and so on) provided by the SA Ports Authority.

There are also challenges posed by import clients who limit available space by not removing their containers from the terminal quickly enough; limits to the physical space available for stacking; and difficulties with the private stevedoring companies who handle cargo on board.

While congestion and delays characterise the container terminals, and especially DCT, the other terminals operated by Sapo including the car terminal in Durban and the iron ore terminal in Saldanha Bay have reputations for world class service. This indicates that these obstacles are critical.

Sapo management, Satawu and the two other trade unions largely agree on what needs to be done to overcome the obstacles in the container terminals. Together we have come up with concrete solutions to be implemented as part of an overall reform plan. In addition Sapo has put aside nearly R2bn (US$275 million) for the upgrades of all its terminals.

But one thing has been getting  in the way of progress. Demoralisation. This has been created by a press that keeps bashing the company and its workers, and by a government that until recently refused to talk about the issues. Satawu has been trying to get government to the table for months. The consultation we have been calling for has now been agreed (see news story on page 6), and we have a new chance to put our case.

Cherry picking for privatisation

Prior to this agreement government consultants were busy drawing up a blueprint for the speedy concessioning of Sapo's port operations, starting with DCT. This implied that DCT, potentially the most lucrative operation, could be "cherry picked". It would be split off from other operations and concessioned, probably to a multinational terminal operator or to a multinational shipping company.

This is exactly what government wanted to do with our railways - split off and concession the best parts to foreign operators, leaving a rump of unviable operations under state ownership. This plan was thankfully reversed through the much-praised tripartite consultation between Spoornet management, labour and government.

The irony of this "cherry picking" approach would be that if the problems identified were not addressed systematically, any new operator would face a hideous operational situation. International experience has shown that, faced with such situations, private port operators adopt a radical anti-worker stance. The result would be that workers would be worse off (and probably fewer) and service would be no better, if not worse. User charges could also be pushed up, adding to already prohibitive transport costs.

Minister Radebe's public promise of a guarantee of jobs for three years is cold comfort. What happens after three years? And in any event, an operator who can't fix the service because the fundamentals have not been put right, is likely to renege on the promise.

Government must put aside any dogged and uncreative determination to concession our ports. In line with the National Framework Agreement, a process has been facilitated whereby organised labour, government and management can explore every means possible of improving service, not only of Sapo but of all port operators, including the private ones. Satawu will go into the process with an open mind.

We will not preclude consideration of additional private sector involvement. But our bottom line is that the ports must be positioned to play a role in our national interests. Port terminal operations, whether publicly or privately owned, must provide decent employment, they must help reduce the cost of transporting goods, and they must guarantee efficient service.

In the end government, labour and management must be satisfied that the choice of the way forward has been thoroughly researched and is not an ideologically driven quick-fix.

Jane Barrett is policy research officer for Satawu, based in Johannesburg.