PORT OF EAST LONDON: Port of East London to Expand

A significant manoeuvre is underway at the Port of East London as Transnet National Ports Authority targets considerable growth from South Africa’s premier river port. Underutilised and threatened by a lack of diversity in its client base, this strategic and well-connected port has all the potential to become another gateway to Africa, driving economic activity across the Eastern Cape.

In August 2022, TNPA appointed Sphiwe Mthembu as Port Manager, tasking him with building long-term plans for the port including the introduction of new technology, attracting new customers, boosting capacity, and connecting the port to the rest of the region like never before.

Currently, the Port of East London is home to various cargo handling facilities across automotive, containers, dry bulk, liquid bulk, and breakbulk, as well as a ship repair resource. But the port’s big brother in Durban, and its sister in Cape Town, as well as its neighbour in Gqerbha are currently all favoured for size and efficiency reasons.

Mthembu – an accidental maritime expert – is looking to quickly reinvigorate the port with ambitious expansion plans.

“Our aim is to get the port operating and functioning at full capacity,” he says.

“The port is currently limited when it comes to accepting deep draught vessels. Our draught at the entrance level is around 15m and that limits us. The exco plan is to widen and deepen the entrance, and that is part of the project that will be happening between now through the next decade – the studies have started already.”

10 YEAR PLAN

The next decade will see the port become a construction site as the entrance is deepened and widened, new facilities are added, and – importantly – rail connections established. Currently, the port – which sits at the mouth of the Buffalo River on South Africa’s eastern shore – sees trucks collect and drop off containers after a journey through the city centre. This leads to congestion and challenges around road maintenance. Transnet has made no secret that it would like to see more cargo railed around the country, and moving materials from the Port of East London onto the country’s rolling network would provide a benefit.

“Our Managing Executive has announced that Transnet has given R4.3 billion to invest in the port for the next decade. As part of that, we will be looking at port development plans that are in the process of approval. They earmark directly to creating capacity in terms of technologies where we are looking at partnering with the private sector to bring those technologies,” explains Mthembu.

“These technologies may include ship-to-shore or ship loaders attached to our silos – it depends on customer requirements and demands. The grain elevator that we have is geared to connect to that type of technology, but the challenge currently is the fact that we have low capacity on the rail side but we will be engaging with our sister company to understand how they can assist the port to ensure logistics function well.”

Currently, a Transnet Freight Rail line connects East London to Gqerbha, – the Cookhouse-Blaney branch line – which was reopened in 2021 after R26 million investment to bring FMCG and other products onto the tracks and off the roads. The idea is to connect the East London IDZ to Gqerbha, reducing time and cost for businesses.

The Port of East London would benefit immensely from a further connection, allowing for easier transfer into the IDZ and further.

“For a port to be connected in the modern day, you need railroad and multimodal systems that will allow the supply chain to function from hinterland, bringing cargo to the port. This will remove trucks from the road and will stop damage to the roads.

“We are open to any operator that wants to come in and ship break bulk cargo. We want to bring all the players together – TFR, the customer, the municipality – so that we can understand how to increase rail capacity. This is our short-term goal,” insists Mthembu.

BIG AUTO FOCUS

Widely respected for its success in the global automotive industry, the Eastern Cape is home to hundreds of organisations across the sector, employing thousands of people. This success is largely down to the location of the region’s ports and their efficiency. In 2021, South Africa exported almost 300,000 vehicles with ports in Gqerbha and easily-accessed-Durban handling the majority of the volume. This is where Mthembu sees significant opportunity for expansion.

In 2021, the Port of Durban was once again criticised by commentators for slumping competitiveness as its capacity is challenged. Transnet announced in September that expansion plans had been approved, but in the short term this means there will be spill over.

“Port of East London is driven by the operation of Mercedes-Benz South Africa (MBSA) and it plays a big role in most industries in this region. The volume of containers that move in this supply chain are headed for the MBSA manufacturing facility. The connection of the port is linked to the MBSA plant and then you have the supply chain activities. That is a worry for the port. If the supply chain breaks down, the port is directly impacted. We are moving into a strategy which will see us diversify and we are looking at the other big sector – liquid bulk – that sector is productive,” highlights Mthembu.

“We will be increasing that capacity to see if we can accommodate other OEMs looking to get into the Eastern Cape by pushing units through the port. In the next three to 10 years, we will have capacity that will enable us to handle two OEMs.

“We will also be increasing the berths on the car terminal side to assist with increasing that capacity. The terminal will then be able to handle two vessels simultaneously. We are looking to begin planning with OEMs or cargo owners to bring bulk operations to the West Bank. It’s all about increasing capacity at the port,” he adds.

On site, there is space available in both the back of port area, and on the dry dock. Ambitious Mthembu doesn’t only want to increase existing business here, but is keen on the idea of building an entire industry in marine ship repair that will bring significant economic impact in the long term. Soon, a study will be initiated, exploring the viability of a fully-fledged maritime repair and engineering offering from the Port of East London.

“We hope to have a strategy on which we can base operations to attract specifically ship repairers to dock and carry out ship repairs in the Port of East London.

“We will be engaging stakeholders so that we can communicate these plans and ensure they are aware of and align with everything we do. The municipality is important here. One of the greatest things we want to do is create a back of port operation where people can come and set up warehousing or other operations to support port operations.

“Ship repair will be the first step in driving employment numbers and we will benefit from the spin offs that come from the Port of Durban. We hope that by the end of the year, our plans will start to bear fruit,” says Mthembu.

WORKING BETTER

For Empangeni-raised Mthembu – a former engineer and packaging industry professional who turned to maritime following successful education where he is currently submitting PhD materials – who has also held senior positions at the Port of Durban, growth is very much on the agenda following a worrying period through the pandemic where global logistics was challenged.

“Cargo wasn’t moving and some ships were being laid off. In South Africa, volumes fell drastically as ports were operating minimally. The movement of people was restricted and we ran with skeleton crews. It was a bumpy time. The ports have fixed costs and with that, although the country was closed, we still had to pay those costs. We did have some vessels coming through with essential goods and we relied on those. We were able to just about sail through, but it was difficult – both financially and emotionally. We put plans in place to shield our employees and we soldiered on. We know our role in the South African economy and we wanted to do our bit to keep things moving,” he says of a time where the daily number of miles navigated by vessels globally dipped dramatically.

Turnaround times are excellent at the Port of East London and, despite capacity challenges, operations are efficient and effective. Clearly, this vital piece of national infrastructure has the ability to bring so much more than it already does to the local and national economy.

“I am of the view that this is a port that should be seen as one of the most important assets for the country as it is the only river port in South Africa. Compared to other ports around the country, we are lacking behind and so we are very keen on improvements – building capacity, training employees, bringing in more ships, creating marine engineering, and developing back of port,” enthuses Mthembu.

Over the longer term, beyond the initial decade of future proofing, the Port Manager is keen for overhaul to unlock further productivity. Currently, the container terminal is located on the east bank of the Buffalo River – fed by the road that leads through the city. Ideally, the container terminal could be relocated to the west bank, where there is more space to create yards and include new technology. Being positioned on the west of the river would also create a link to the R72, reducing truck traffic through the metro area. Importantly, this could also open up access to the nearby East London IDZ and create a location of choice for manufacturers.

“We are increasing capacity to see if we can attract another OEM, taking away the direct reliance on MBSA. We also want to target ship repairs. When you have ships coming for mechanical repair, you are not only bringing ships for cargo, you are also bringing ships for repair. We do have the facility but it is underutilised.

“As we grow with a new OEM, that will create jobs. As we add another industry around ship repair, that will develop expertise, and the industry will know that the Port of East London has these skills. We also want to bring bulk – grain, coal or manganese. When we are able to diversify like that, we will have managed to link the port to the hinterland and that is what creates jobs.

“We aim expand the automotive terminal, rebuild the container terminal, attract break bulk cargo, and expand liquid bulk. We will then be a fully-fledged and efficient river port. We have the capabilities to do that as we have a line from the port to Mthatha that is not utilised. There is a rail line that moves from the port, through the IDZ, all the way to Gqerbha – that line is not utilised. Strategically, we have to look at how we attract volumes to actively open these corridors and also attract cruise ships to contribute to the tourism industry,” details Mthembu.

Ultimately, the port’s primary aim is to facilitate trade and economic growth by providing and sustaining a reliable and cost-effective port supply chain system. With Mthembu’s ideas, and the backing of stakeholders as well as TNPA, this could be matched before the end of the decade, one step at a time.

“We want to position ourselves as the automotive choice for all the OEMs, even with PE close to us, we want to increase automotive as much as possible, despite being a multipurpose terminal.

“The main focus right now is widening and deepening the entrance, whilst focussing on rail allocations, allowing easy access to this beautiful river port,” he concludes.