Maersk and Transnet Battle Out Privatization of Durban Terminal in Court

APM Terminals, Maersk’s operating company for terminals around the world, has gone to court attempting to overturn its loss of the concession for South Africa’s Durban T2 operation. Transnet, the South African government-controlled company, confirmed to the local media that it is aware of the filing by Maersk and reports it has now filed an opposing affidavit to the Durban High Court.

Reports of the pending lawsuit surfaced after Transnet reported in March 2024 that it was moving ahead to finalize a planned joint venture with Philippines-based International Container Terminal Services (ICTSI) as the preferred bidder for the privatization of Durban’s container terminal on Pier 2. The process began in 2021 and initially generated 18 responses, including nine from international companies. Ten companies were ultimately shortlisted and six bidders submitted proposals before a winner was selected in July 2023.

Maersk is reportedly challenging in the court filing the financial strength of ICTSI and whether the company met the terms of the tender offer. Bloomberg, which has seen a copy of the court filing, is reporting that it says “ICTSI ought to have been disqualified for failing the solvency requirement.” The tender required a company with the financial strength both to invest in the port and its facilities as well as to attract other investors. The new joint venture is set to gain a 25-year concession for the operation of the terminal and was to serve as a model for other privatizations in South Africa. 

Under the terms of the tender, Transnet reported it would form a new 50-50 joint venture with ISCTI for the ownership and operation of Durban’s container terminal. The port has long been criticized for its inefficient operations. DCT Pier 2 is the biggest container terminal in South Africa handling more than half the country’s volume and nearly three-quarters of the port traffic in Durban.

South Africa’s Business Day newspaper reports a spokesperson for ICTSI said the company is “ready to go” with the operation at Durban and the investment to upgrade the port. They said the tender went to the highest bidder and that they had topped APM’s offer by $100 million. At the time, Transnet called ICTSI the best operating partner for the port.

Bloomberg reports that APM was the runner-up in the competition. Transnet short-listed companies including COSCO, DP World, and Chinese port operators. Maersk is reported to be asking the court to set aside the appointment of ICTSI with commentators saying it could set back the process indefinitely.