Enrique Razon, CEO of International Container Terminal Services, Inc. (ICTSI), has made a rare public statement condemning Maersk for blocking ICTSI’s deal in Durban Container Terminal (DCT) with state-run Transnet.
Earlier this summer, ICTSI and Transnet Port Terminals (TPT) agreed to a 25-year joint venture to build and modernise DCT Pier 2. DCT Pier 2 is Transnet’s biggest container terminal, handling 72 per cent of the Port of Durban’s throughput and 46 per cent of South Africa’s port traffic.
Lawyers for APM Terminals (APMT), a subsidiary of Maersk, initiated legal action against ICTSI’s access to South Africa’s largest port last month, prompting a South African court to suspend ICTSI’s agreement with Transnet.
Following its initial loss to the bid, APMT levied a lawsuit against ICTSI on the grounds of an unmet stipulated solvency measure. The court thus took issue with ICTSI’s contract on the grounds of unfairness after the Judge declared that the concessions granted to ICTSI were not offered to its competitors.
The interim ruling could put the contract between ICTSI and Transnet on hold until the new year when the court case will likely conclude.
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In light of recent developments, Razon, the second-richest man in the Philippines as per Forbes, has publicly intervened to accuse competitor Maersk of “trying to delay and stop the process”.
“Maersk has dominated the South African market since it acquired SAF Marine over 20 years ago and today Maersk holds a dominant position and strong pricing leverage in the market,” Razon claimed.
“Maersk is clearly desperate to prevent the entry of an independent common user terminal operator. In short, after failing to produce a strong bid, they are instead trying to delay and stop the process by using the Courts.”
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Despite what has transpired, Razon maintains ICTSI’s innocence and rejects claims of malpractice.
“We outbid Maersk by $100 million and they are attempting to use a non-essential technicality to ensure that the Government of South Africa does not succeed with part of its economic agenda.”
“The qualification rules were very clear: Transnet could and can evaluate the bidders in whatever way was in line with the law and met the public interest. Maersk is now trying to question a non-defined metric that many of the largest public corporations in the world could not meet, including Apple Computer.”
While posing a setback for ICTSI, Razon further stressed how the latest developments hinder South Africa’s long-fought pursuit towards privatisation along with the government’s economic agenda: “South African businesses are suffering more than ever from inefficiencies in the ports… Volumes are down dramatically, and container port profitability is down significantly.”
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Beyond the operational disruptions this ruling would cause, Razon believes the ruling sets a negative precedent for all future private partners looking for opportunities in the region. More significantly, however, he argues that this plays directly into Maersk’s ambition to monopolise South Africa’s logistics system.
According to Razon, Maersk “have just as much interest in the process failing as they do in having their far inferior bid being accepted”. Be it continual delays or a striking out of the contract, both outcomes present themselves as a “success for Maersk’s desire for end-to-end control of South Africa’s logistics system”.
“While we have great respect for the Judiciary and the strength of the South African legal system, we believe that serious bias has occurred.”
Earlier this September, ICTSI announced the construction of its new terminal in Bauan, Batangas, in the Philippines.
