Court clears ICTSI to run Durban terminal after Maersk challenge fails
South African Court Backs ICTSI's Port Concession
A South African court has upheld the awarding of a crucial port concession to International Container Terminal Services Inc (ICTSI), dismissing a legal challenge from APMoller-Maersk’s terminal division. This ruling allows the Filipino operator to take control of the Durban Container Terminal (DCT) Pier 2, which is the busiest container facility in the country. The Durban High Court’s decision confirms that the state-owned ports group, Transnet, acted lawfully in selecting ICTSI for a 25-year joint venture.
Legal Challenge and Court Ruling
The legal dispute arose when APM Terminals, a subsidiary of Maersk, contested the tender process, claiming that ICTSI’s bid relied on market capitalization rather than balance sheet equity to satisfy solvency requirements. Maersk argued that this approach provided ICTSI with an unfair advantage in the bidding process. However, the Durban High Court found no irregularities in the tendering process, ultimately rejecting Maersk’s appeal.
Following the ruling, ICTSI expressed satisfaction, describing the court’s decision as a validation of a fair and transparent tender process. The ruling clears the path for ICTSI, led by billionaire Enrique Razon, to move forward with its planned investment of R11 billion (approximately $638 million) in DCT Pier 2. This terminal is critical, handling 72% of Durban’s container throughput and 46% of South Africa’s total container volumes.
APM Terminals had initiated its court action in April 2024, which delayed Transnet’s broader strategy to attract private capital and expertise aimed at modernizing its underperforming ports. In response to the ruling, APM acknowledged the importance of operational improvements and infrastructure development in Durban, stating that it is currently reviewing the judgment.
Implications for Transnet and Port Modernization
The court’s decision is a significant milestone for Transnet, as it confirms the integrity and transparency of its procurement process. This ruling removes a major obstacle to implementing the transaction, allowing the company to concentrate on modernizing and expanding DCT Pier 2. Chief Executive Michelle Phillips emphasized that this project is vital for enhancing port productivity and improving South Africa’s trade competitiveness.
The concession awarded to ICTSI is part of Transnet’s broader initiative to attract private investment to its container terminals. This strategy aims to reduce debt, upgrade facilities, and enhance operational efficiency across the country’s ports. With the legal challenges resolved, Transnet can now proceed with its plans to revitalize the Durban Container Terminal, which is essential for bolstering South Africa’s position in global trade.
