South Africa Takes Steps to Prevent Port Strikes

South Africa’s government is taking proactive measures to prevent port strikes that have historically caused significant damage to the country’s economy. The Department of Labor has put forth a new directive aimed at expanding the list of essential services to include port operations, effectively banning strikes for certain categories of Transnet employees, the national port and rail authority.

The government’s directive outlines that marine services such as navigation, pilotage, towage, and berthing will be classified as essential services. Additionally, cargo services involving explosives, flammable, and pharmaceutical products will fall under this category. Port security, emergency, and firefighting personnel have also been identified as essential services.

This directive follows a recent wage agreement between Transnet and the majority union UNTU, which narrowly avoided a major port strike in South Africa. The agreement includes an 18 percent salary increase over three years, preventing the labor action that UNTU members had voted in favor of back in May.

In 2022, a port strike led by UNTU almost paralyzed South Africa’s economy, causing significant disruptions to exports. The 11-day strike resulted in over $3 billion in export losses, underscoring the importance of stable port operations for the country.

Government Reforms and Transnet’s Progress

The directive on port services is part of broader government reforms aimed at restoring Transnet to profitability. The state-owned logistics group reported a loss of $117 million in the six months leading up to September 30 last year, citing operational challenges and increased costs.

To support Transnet’s turnaround efforts, the government approved a $2.8 billion guarantee facility to fund operations, debt servicing, and capital investments over the next two years.

Despite the challenges, Transnet has recently achieved significant milestones in its port operations. The successful berthing of ultra-large containerships, such as the MSC Rifaya and MSC Nicole Mastro, at the Port of Durban and Port of Ngqura respectively, showcases the company’s capabilities.

MSC Nicole Mastro, with a capacity for around 24,000 TEUs, represents the latest achievement in Transnet’s efforts to enhance its port infrastructure and accommodate larger vessels, further solidifying its position as a key player in Africa’s maritime industry.