ICTSI Scores Major Milestones in South Africa and Philippines

Last week, the Philippines-based port operator ICTSI celebrated two major milestones, cementing its status in the global terminal operations. In South Africa, the Durban High Court upheld ICTSI’s 25-year concession of the Durban Container Terminal (DCT) Pier 2. The state-run Transnet had initially awarded ICTSI the concession back in 2023, but the operator’s rival APM Terminals moved to court to block the contract.

In the legal challenge lodged in April 2024, APM Terminals (affiliate of Maersk) pointed out some irregularities in awarding the concession. One point of contention according to APM was the method ICTSI used to calculate its solvency. While most bidders including APM used audited financial statements, ICTSI used market capitalization. According to tender requirements, a solvency ratio of at least 0.4 was required, with the calculation based on total equity over assets.

In deciding the case, the court argued that not every departure from prescribed procedure must be set aside. “To have disqualified ICTSI for its failure to achieve solvency ratio (based on a specified formula) would have been to disqualify a meritorious tenderer, and open the way for a significantly lower bid,” added the court ruling.

ICTSI offered a bid of $638 million against APM’s $530 million offer. With the end of the legal battle, Transnet is now in a position to progress with privatization plans at the Durban port. In the past few years, the port has been on the headlines for operational concerns resulting from cargo congestion, among other port inefficiencies.

DCT Pier 2 is the largest container terminal in Durban, handling 72 percent of the port’s throughput and 46 percent of South Africa’s container traffic. Transnet has said that private sector participation would help to accelerate growth of the terminal as well as solve the perennial capacity challenges. During the 25-year concession period, ICTSI will partner with the Transnet Port Terminals(TPT), upgrading the DCT Pier 2 capacity to 2.8 million TEU per year, from the current two million TEU.

Back home in Philippines, ICTSI subsidiaries are also celebrating 25-year extension of their concession in Subic Bay International Terminals. The subsidiaries Subic Bay International Terminals Corp. SBICT and ICTSI Subic Inc. (ISI) will continue to operate and manage the New Container Terminals 1 and 2 (NCT-1 and NCT-2) through to 2058.

ICTSI pledged to invest $130 million, further improving combined annual capacity of NCT-1 and NCT-2 from the current 600,000 TEU to one million TEU. With the terminals strategically located within the Subic Bay Freeport Zone, demand is expected to rise as major intra-Asian shipping players launch direct services.