The scarcity of warehousing in the port of Durban - The economic opportunity cost
There are cycles in every industry, but in the property industry, the old saying of location, location, location could not be more critical than proximity to the harbour for players in the logistics industry.
The cost of trucking containers, for example, from the Durban Container Terminal in Bayhead to a warehouse to be unpacked is dependent on distance. Some containers go straight to Johannesburg or all the way into Zambia and the DRC. However, many containers get grounded and unpacked and the goods repacked before going on to their final destinations.
A second example is bulk cargo such as cement, rice, fertilizer and maize that gets transported from the Maydon Wharf key side in tipper truckers to a warehouse. Off-loading an 36 000 ton ship must be done as fast as possible so the trucks receiving the bulk cargo straight off the ship cannot go far before returning for their next load. This cargo can only go into a warehouse leased or owned by a licensed Port Terminal Operator.
Transnet National Port Authority "TNPA" not only licenses all Port Terminal Operators, but also owns all the land in the harbour precinct and is tasked with the responsibility of leasing it to companies. Interestingly, TNPA does not see itself as a landlord in the true sense of the word. They are only interested in leasing the land and want nothing to do with the top structure. This is generally the tenant's responsibility. As a result, they are not developing new warehousing within the bounds of the harbour. The only new development currently underway is that of Newlyn Property who have entered into a lease with TNPA for a major portion of land and are building warehousing. If you are interested in development please contact me.
As a result of this strange arrangement TNPA has created for itself, logistics companies have no other choice, but to find warehousing outside of the Port precinct. This increases the cost of transport which ultimately gets passed on to consumers and producers in our economy. It has also created opportunities for developers to build warehousing close to the Port and demand a premium in terms of rentals.
Another logistics park development that is currently underway is at the old Clairwood race course. The uptake has been very slow from when it was launched over two years ago because of the asking rentals. Clairwood is also a good 15km from the Port which compounds the costs.
The end result of a scarcity of good, modern warehousing within the Port precinct negatively affects our economy by increasing the cost of logistics. It is my plea that TNPA rethinks its role as landlord in South Africa's Ports and begins to co-develop new modern warehousing with the private sector if they cannot afford to do so on their own budget. This would not only positively impact TNPA's income, but it would also lower the logistics costs for the entire Southern African region.