Marine firm’s departure flags parlous state of ports
DCD Marine pushed out by global slump, high tariffs and failing facilities
CAPE Town Harbour has lost one of its main clients in the ship- and rig-repair industry because of high costs and the sharp decline in global trade.
Transnet has confirmed that DCD Marine, one of the mainstays of the Cape’s busy shiprepair business, is pulling out of Cape Town’s A-berth facility.
Sipho Nzuza, Cape Town port manager for the parastatal’s National Ports Authority, said DCD Marine had “. . . opted to withdraw from the lease arrangement with FerroMarine Cape due to the global business decline of oil and gas”.
The slump in oil and gas exploration as well as in shipping has impacted on the South African economy, with the Paarden Island industrial area in Cape Town particularly affected.
But it is not only this country’s economy that has been hit: last month, London’s Financial Times newspaper reported that the largest container ship yet to call at US ports stopped operating between Asia and the US after just five months because of an industry slump.
Locally, several players in the industry said they believed delays in fixing crucial infrastructure at South Africa’s ports had exacerbated the situation.
One example is the obfuscation and the delays in relation to the long-awaited repair facility in Saldanha, about 100km north of Cape Town.
And nothing has yet come of a promised R2-billion rejuvenation programme in the Durban and Cape Town harbours.
The project was part of Operation Phakisa, an economic development programme launched two years ago. The first phase was to unlock the economic potential of South Africa’s oceans.
Another fear is that South Africa is pricing itself out of the international ship-repair market by charging high tariffs relative to competitor ship-repair facilities — notably “nearby” Walvis Bay in Namibia, which has grown exponentially.
Brian Blackbeard, the MD of oil and gas service hub FerroMarine, said DCD’s departure, set for August, was understandable given the downturn.
DCD’s average annual turnover plummeted from R600-million to around R40-million in the most recent financial year. It now employs 52 people compared with 400 in its heyday a few years ago.
Although DCD declined to comment in detail, several industry stakeholders said Transnet’s tariffs were also a reason for the company’s departure.
“There is no work and the tariffs are killing them,” said one senior executive.
Infrastructure in Cape Town that needs repair includes:
A water pump at Sturrock dock, which has not worked for months; ý Most of the dry-dock cranes; ý The onshore gas facility and bunkering pipes; and
The Robinson dry dock, which is reportedly leaking.
In Durban, the inner gate in the Prince Edward Graving dry dock has yet to be replaced, which means it can dock only one ship at a time.
Transnet’s floating dock hasn’t worked in eight years; two cranes recently fell down, and others have been decommissioned.
Durban Harbour has serious dredging issues, and in Cape Town, a growing fleet of arrested and derelict ships is taking up valuable space.
Saldanha was supposed to become South Africa’s new repair hub, but Transnet decided to repurpose the quay for manganese export — only to backtrack last month, and announce the facility was once again available for marine repairs.
As a result, the industry is understandably cautious about investing in the project.
But Durban port manager Moshe Motlohi said the parastatal had acknowledged the challenges faced by the repair industry and had committed itself to negotiating with firms in the sector to solve them.
“Progress has been made in this regard under Operation Phakisa. Nationally, TNPA [Transnet National Ports Authority] is spending a total of around R2-billion over the next five years to refurbish repair facilities, while we will invest an estimated R13-billion to R15-billion to create new repair facilities at the South African ports.”
This week, some commentators were cautiously optimistic that Transnet appeared to be “getting the message” and was addressing some problems.
Western Cape economic opportunities MEC Alan Winde said the repair industry was a vital cog in the ocean economy: a recent oil rig repair job injected more than R1-billion into the local economy. But high tariffs remained a problem.
“We are still considered expensive, but the rand-dollar [exchange rate] helps,” he said.
Durban-based ship repairer Elgin Brown & Hamer said the poor state of repair services and high port tariffs were widely acknowledged: “International vessel owners . . . have been known to delay repairs to avoid docking in Durban or Cape Town, and rather waiting until the repairs can be effected in other more cost-effective ports such as Singapore,” it said.
Owners have been known to delay repairs to avoid docking in Durban