This chapter will analyze the Port of Durban from an economic sciences position and will seek to spread out on the general theory presented in the literature reappraisal and use it specifically to the Port of Durban. This chapter will besides function as a foundation for the proceeding chapter which will analyze the assorted CBA options and informations for Durban. The ports significance and impact will be examined in the context of the South African and local economic system through its income and employment bring forthing consequence. Though the measure of lading traveling through a port is of import, of more involvement is the type of lading that a port focuses on.

3.2 The South African Port Sector

Before analyzing the Port of Durban in isolation, it would be prudent to briefly discourse the South African Port scenario in a broader sense. In South Africa, ports are considered national assets and are managed by the authorities run late by SAPO. South Africa is a major sea-trading state comprising of about 8 trading ports, viz. , Durban, Richards Bay, East London, Port Elizabeth, Mossel Bay, Cape Town, Saldanha and the under building Coega. South Africa has evolved into a major sea-trading state over the last four or so decennaries and in 2002 handled 3.6 % of universe sea trade by volume. In footings of ton stat mis or existent activity, this figure increases to 6 % of planetary trade, puting the state within the top 12 globally and ensuing in a planetary maritime activity portion that is more than 20 fold its planetary GDP portion. Sea trade constitutes more than 90 per centum of trade in South Africa and ports play a critical societal and economic function both nationally and regionally. The bulk of the port activity is concentrated on the east seashore of South Africa. A blunt illustration of this fact is that Durban and Richards Bay together make up 76 % of sea trade in the state. Traffic growing in the 1990 ‘s was derived from two primary regional points and beginnings, viz. Durban from a general lading position and Richard ‘s bay from a natural stuffs perspective. Richards Bay, which deals chiefly in bulk goods, such as coal, ore and steel, has seen its one-year tunnage addition from 55 million dozenss in 1989 to in surplus of 90 million in 2000. Sing sensed value in footings of tunnage is a blemished attack since in footings of economic linkages and value-adding, managing a ton of coal is non the same as managing a ton of refined goods. The figure below illustrates the dislocation of sea trade activity by port in South Africa. It can be seen clearly that Durban and Richards Bay are giants in comparing to the other ports. ( Chasomeris, 2003 and Jones, 2002 )

Fig 17: Entire Traffic Volume in South Africa

Beginning: Department of Transport, 1998 and Jones, 2001

The South African Ports sector experienced important capital intensive investing in the 1970 ‘s and 1980 ‘s, which was biased towards the majority transportation sector. However, universe tendencies have seen a migration towards containerisation and unitization and South Africa is no exclusion, with the state using containers for the first clip in1977. Up until 1990, the available capacity could provide for national traffic degrees of about 1 million TEU ‘s degree. The deficiency of equal container capacity, combined with turning demand, brought with it a battalion of jobs. On the demand side, South Africa became a democracy and re-entered the globalised universe, ensuing in a noticeable rise in seaborne container volumes, due to liner bearers returning to the South African trades and increased trade liberalization. The rush in volumes green goodss inevitable negative effects of holds and vas waiting lines. By 2000 the combined sum of one-year TEUs handled in South African ports was 1.8 million and this was encompassed utilizing with the same basic container quays that had been constructed in 1977. There was some limited capital investing in strategic country ‘s in the 1990 ‘s, such as lading extensions to bulk and neo-bulk installations in Richards Bay. The new millenary brought with its bolder and more ambitious port investing enterprises. A new industrial hub position port in the Eastern Cape, which was earlier envisioned but ne’er actioned upon, was now being constructed. Second, the Durban general lading substructure has received important ascents and extensions such as extensions to landside installations as good, intensifying and widening lading handling superstructure and substructure every bit good as deepening and widening the seaport entryway. Because of the age and mismatch of the lading handling substructure, productiveness has lagged that of international degrees, ensuing in congestion that is a changeless characteristic of local ports. There were besides supply side issues to cover with such as line drive path going more specific and centred around hub position ports. As such, hub position ports have to supply capacity that exceeds national demand, doing attainment of hub port position hard in capacity constricted scenarios. This is compounded by the reluctance of ship-owners to migrate shorter paths such as Port Elizabeth in South Africa. South African ports comparative competitory stance with their southern hemisphere opposite numbers can be gauged from the tabular array below. Looking at both indexs, South African ports emerge as clear leaders on both the African and Southern Hemisphere forepart. Richards Bay is ranked foremost on the tabular array in footings of entire traffic, as it has a big sum of coal and other majority ladings go throughing through its doors. Durban, although graded 3rd overall, is graded 1st in the container class it is clear that Durban is the taking multi-purpose port in South Africa and the Southern Hemisphere. ( Jones, 2003 ; Jones, 1997 ; Department of Transport, 1998 and Lawrence, 2000 )

3.3 History of the Port of Durban

The port is situated on the east seashore of South Africa at coordinates 31o 02’E in longitudinal and at 290 52 ‘S in latitudinal footings. Trading activities in the port of Durban can be traced back since 1824, with the port rapidly deriving a favoured position among mariners amd bargainers due to it being a natural seaport. Interest in Durban Bay grew tremedously in the early old ages of its operations, with imports duplicating between 1849 and 1850. This, coupled with larger vass, resulted in a much needed enlargement to the seaport entryway. Over a century subsequently, Durban has 63 positions and 6 fix positions, which can be loosely seperated into five chief sections of the port. The first sections has two wharfs and has a multipurpose map thats handles general, package and unitised lading. The 2nd section of the port is located by Salisbury Island and Island View. A 3rd section is the Maydon Wharf country, which contains private terminuss every bit good as terminuss controlled by Transnet. The Point terminal country and the Bayhead country ‘ are the 4th section and 5th section severally. Below is a image of the port of Durban that illustrates the five sections discussed.

Figure 19: The Current Layout of Durban Port

Beginning: Google Earth, 2010

3.4 Economic Significance of the Port of Durban

As, can be seen in figure 17 above, the logistical strength of the national transportation substructure, rests chiefly in KZN. The port of Durban, like all other public ports in South Africa, is an illustration of a port under national legal power, its official name being the National Ports Authority ( NPA ) , thereby leting centralised planning. Durban is a port of pick because of its substructure in topographic point enabling it to be a full service general lading and container port. In add-on to this, Durban is good serviced by an adequete rail and route substructure, which links it to the economic hub of South Africa, Gauteng. In add-on to this, the KZN part is a big economic part in itself and is 2nd merely to Gauteng in South Africa. Figure 21 below, illustrates a snapshot of the South African port sector for 2009. In footings of entire lading metric tons handled, Durban has 20 % of the market and is dwarfed by Richards which has more than dual Durban ‘s tunnage handled, at more than 40 % . Richards Bay, which was constructed in the 1970 ‘s, has had an tremendous impact on Durban ‘s port planning and maps. The primary ground for its being was to function as high-mass export point for natural stuffs such as coal. Richards Bay besides diversified its goods base to include, at a lower cost, goods types that were traditionally the sphere of Durban such as neo-bulk lading like steel, metals and forest type merchandises. At the clip of Richards Bay building, Cape-sized majority vass were excessively big to come in Durban. ( Jones, 2003 and Stats SA, 2010 )

Looking once more at figure 21 above, it can be observed that even though Durban lags other ports in gross tunnage of lading, it still has by far the most figure of vass docking. One of the major grounds for this was the emerging laterality of Richards Bay, which forced Durban to concentrate on lower-volume majority, break-bulk and liquid-bulk. This enabled great diverseness within the port in footings of lading type every bit good vessel type and measure. Additionally, vass that carry interrupt majority are traditionally far smaller than that of traditional majority, therefore explicating why more vas docking are in Durban than Richards Bay for the same sum of lading ceterus paribus. With mention to the figures above, it can be observed that Durban has 43 % of entire general lading vass, 42 % of entire oilers and 44 % of entire container vass. The most of import figure, in relation to Durban, is that of TEU ‘s handled since this is where its laterality and significance semen to the bow. Durban has the ideal construction to manage containers and since Richards Bay has unequal construction for containers, Durban ‘s laterality in containers was from the beginning. Jones ( 2003 ) show that a turning international tendency of transporting lines with respects to containers is to organize trade and activities around so called “ hub ” ports which meet and cross at “ sub-regional transhipment nodes ” . This agreement is biased for the being of a individual hub type port on the eastern shores of the Southern part of Africa. Since, Durban is the state ‘s major container port, is good frequented by major transportation lines, has terminus and hub position, it is rather sensible for it to stay South Africa ‘s primary container port. The other options on the eastern sea board are non truly rivals when it comes to containers. Richards Bay is chiefly a majority port and does non hold the equal substructure to widen its activities beyond this range. Maputo has big divergence costs from traditional transportation lines every bit good as limited deepness and capacity. Port Elizabeth has weak land side links to Gauteng every bit good as holding limited local demand to warrant a major port at that place. ( Suykens, 1984 ; Jones, 2001 and Jones, 2003 )

Even though Durban lags Richards Bay in footings of pure tunnage, this in itself is a hapless yardstick of economic impact and significance since no history is taken of lading value or employment leanings of substructure required. By and large, in footings of economic and employment impacts, general lading provides the most followed by dry-bulk lading and in conclusion liquid-bulk. Bearing this in head, comparing two ports merely on the footing of tunnage is frivolous and more specifically in Durban ‘s instance it can be seen that from a ports position, it handles higher valued ladings than Richards Bay. This is particularly apparent when one considers one occupation is created per 47000 metric tons of lading handled at Richards Bay, whereas in Durban, one occupation is created per 7500 metric tons of lading handled. Figure 22 below farther illustrates the economic profusion and chance that containers present. Additionally, in 2004 an mean container vessel spent R2.94 million per port call, far transcending the R1.8 million for a breakbulk lading vas every bit good as transcending the R1.3 million for a sand trap vas. ( Suykens, 1984 ; Jones, 2001, Tempi, 2006 and Jones, 2003 )

As is the instance with South African ports, the port of Freemantle in Australia, shown in figure 22 above, derives the most economic prosperity from containers from both a direct and indirect position. Even though containers account for merely 13 % of activity in the port, they contribute 55 % to economic activity. Consequently, containers have the greatest employment bring forthing effects, followed by dry majority and the liquid majority. Though kineticss differ from port to port in footings of substructure, disposal, socioeconomics and geographics, a wide consensus can be reached from the figure above embracing a sort of “ regulation of pollex ” attack. As such, containers offer the most economic chance for a port and since Durban already focuses on this country, it would be prudent to go on with this tendency. Therefore, it is rather apparent that both the present and future comparative advantage of Durban port remainders in the kingdom of containerised ladings due to ground shown above. Besides, since the port is so competently designed for and dependant on containerised lading, the remotion of this great economic magnifying beginning would be peculiarly lay waste toing on the Durban part as a whole. ( Jones, 2001 and Jones, 2003 )

Looking at figure 23 below, it can be seen that the Durban port has seen an extraordinary addition in containers, with annualised growing of between 8 % and 10 % for the last decade.A As was shown supra, containers form an built-in cog in the Durban port machine from an economic sciences and societal position since they provide a beginning of trade, income and employment. Container growing is affected by a myriad of factors like increased volumes of universe trade, lower trading limitations, the permutation to containers from other conveyance systems, South Africa ‘s recent economic public presentation and lifting per capita incomes.A The aspects examined below are containers landed, shipped and empty and as the diagram shows, all three classs have increased from 2002-2007. The growing between 2002 and 2007 is nil short of dramatic, but this growing has non come without costs and restraints. However, necessitating containers and supplying equal infinite for them are two wholly different things and this will be explored below. Besides, we have seen that general lading is the richest signifier of lading and has the largest employment benefits. South Africa needs extended general lading capablenesss and in this regard, Durban ‘s demands are similar to national demands. It is therefore clear that Durban needs the container industry for continued endurance and prosperity, but whether the container industry needs Durban as much remains to be seen. ( Jones, 2003 )

Figure 23: Entire TEUs Landed, Shipped & A ; Transhipped

Beginning: New people’s army, selling graphs, 2008

Durban ‘s greatest strengths, viz. its ideal location, good economic linkage and strong substructure, have besides evolved to be its Achilles heel, since its popularity particularly for containerized lading, has seen demand rush amidst largely fixed substructure. With the growing of sea trade demand, the existent jobs of Durban are the deficiency of equal Marine substructure, but its function as port with terminal capacity, and the managerial capacity and willingness to run the present container terminus at acceptable public presentation degrees. A supply side response by the governments to these demand force per unit areas has been slow and limited. The growing of containerised lading volumes has put the port ‘s container terminus under sustained force per unit area since the mid-1990s, and at times has overwhelmed available capacity. The effects of which have been frequent waiting lines of container vass, unduly high position tenancy rates, and holds to container vass and their ladings. The larboard country is inundated with industrial and commercial development, doing infinite an expensive premium, above all for neo-bulk infinite intensive ladings like steel and wood merchandises. It is hence no surprise to see certain of these ladings migrating to Richards Bay, where infinite is at less of a premium. The Durban-Gauteng rail line possesses significant trim capacity, but runing jobs associated with the handiness of Transnet have reduced the dependability of rail. This job is peculiarly serious for certain majority terminuss that are reliant on rail since for majority trade goods rail is the cheapest and most efficient signifier of conveyance. Previously, Durban ‘s major economic disadvantage was its inability to host Panamax size-threshold ships due to its deficiency of deepness. However, after recent capital investings, the entryway breadth has been increased from 110m at its narrowest to 220m and the deepness in the outer channel from 12m to about 19m. However, this is far from equal and as can be seen in Ircha ( 2006 ) which states that hub position type ports must hold the followers in order to stay relevant:

aˆ? Container-stacking densenesss of 2000-4000 TEUs per hectare ;

aˆ? Sustained ship-to-shore gauntry Crane productiveness of 50 moves per hr ;

aˆ? Three twenty-four hours dwell times ;

aˆ? 30-minute truck turnaround times ;

aˆ? On-dock rail service ; and

aˆ? Water deepnesss by the position of 15 meters and more.

Presently, Durban subscribes to one of these parametric quantities, and if it wishes to go efficient and remain productive and relevant, governments should seek to subscribe to all of them. Making so would necessitate important capital investings such as substructure enlargements. ( Lawrence, 2000 ; ISL, 2001 ; Fairplay, 2003, Ircha, 2006, Transnet, 2010 and Jones, 2003 )

3.5 Multiplier Model

The theory of the Keynesian multiplier was covered rather extensively in the literature reappraisal. Figure 22 above touched on the multiplier procedure for the port of Freemantle, but the construct will now be explored and applied in far more item. The economic impact of port activities on the local economic system can be subdivided into three wide countries. The first country is that of straight port-related or port generated activities, that would discontinue to be if the port were to shut. The 2nd country is that of indirectly port-related activities and pertains to backwardly-linked services and substructure. The 3rd and concluding wide class is termed induced effects, and is in fact the multiplier consequence from other inputs. It arises as those employed in the old two classs, re-spend their money in the local economic system, thereby increasing the original economic impact. Jones ( 1998 ) conducted a survey so as to determine the Port of Durban ‘s economic impact on the local economic system. Figure 24 below is taken from that same survey and as can be observed, 24 000 direct port related occupations from about 360 concerns are created through first unit of ammunition inputs. Of the 24 000 occupations, about 8500 are from Transnet, which is an indicant of the important function that the establishment plays in the local part. The 24 000 figure translate into a pay measure of about R950 million rand in 1994 pay degree. Assuming an rising prices rate of 10 % per annum, this figure would compare to about R4 Billion in 2010 footings! Coupled to this, many port activities were in fact excluded from the above computation such as insurance, fiscal services, medical services and legal services. ( Jones, 2003 )

Another ground why the employment figure is conservative is that it fails to account for the induced or multiplier consequence. As shown in the literature reappraisal, the economic or employment consequence is extended far beyond the initial disbursement drift whereby the concluding unit of ammunition of entire outgo usually far exceed the initial input. The multiplier varies from part to part depending on the mean fringy leaning to devour, revenue enhancements, and how much money is kept within the local part. Jones assumes that since the bulk of port employees are in fact low to middle income earners, which is non an hideous premise. Bearing this in head, an mean revenue enhancement rate of 20 % , MPC of 0.85 and a keeping rate of 0.85 is used to explicate the multiplier value. The information is substituted into the multiplier equation from the literature reappraisal and outputs a multiplier value of 2.4. The port of Seattle conducted an economic impact analysis and depending on which premises they used, the multiplier ranged from 2.9 to 4.4. The port of Lake Charles Harbour besides conducted an economic impact survey and used a multiplier of 2.6 and the port of Hastings derived a multiplier of 1.58. Therefore, the figure usage by Jones is in no manner over the top when one looks at other larboard economic impact documents and it even falls on the lower terminal of the spectrum. The box below illustrates the computations that were used to obtain the multiplier. At 1994 monetary values entire income generated by the port is about R2.3 billion. Once once more, if we assume a 10 % addition per annum, in 2010 monetary value footings, this would compare to R9.6 Billion! ( Jones, 2003 ; Meyrick Associates, 2007 and Martin Associates, 2007 )

Even with the multiplier consequence, the regional economic impact of the port is under estimated since rewards and wages are non the lone costs in a port. Industries which provide inputs and services to port constitutions are excluded. In the same paper, Jones efforts to cipher these really costs and some of the illustrations include paper, ropes, Cranes, maulerss and belongings costs. Jones does this by working out that on mean 48 % of entire costs are non pay costs and based on this premise, a 1994 figure of R500 million is generated from port related outgo which is non linked to rewards. This sum extrapolated to regional labour snap ‘s, induces a labour figure of about 7000 occupations. The refineries around the port employ around 1800 people and the Island View country approximately 500 every bit good. Therefore, as Jones justly says, the port and port related activities generate around 40000 occupations in the local economic system, a figure which eThekwini online concurs with. Looking at the box above, it can be calculated that the entire economic impact of the port is R3.5 Billion in 1994 monetary values. In 2010 pecuniary footings, this equates to approximately R14.62 Billion. Additionally, eThekwini online provinces that the port and related industries contributes over 20 % of Durban ‘s GDP and about 1.5 % of national GDP! Therefore, it is rather apparent that the port and its related bunchs are built-in to the Durban community in footings of employment and societal stableness. ( Jones, 2003 and, 2010 )

3.6 Constraints to Expansion

As shown in Figure 18 above, Durban is the largest general lading port in Africa and the 2nd largest in the southern hemisphere, and Durban being a port metropolis will profit from any growing in international trade volumes particularly of the general lading type. Although Durban ‘s port substructure is extended, at present it suffers from critical capacity restrictions. The port presently provides 63 positions that can be used for lading related activities every bit good as fix installations for a farther 8-9 vass. These capacity restraints are encountered in regard of the port ‘s marine substructure, cargo-working installations and its overall articulation with landside lading distribution systems. The restraints are indicated in the figure below, which illustrates the state of affairs for Durban in 2004/5, sing that the teu sum was 2,395,175 teus for 2009, it becomes clear how grave the capacity state of affairs is. Sing how sculpt the capacity state of affairs is, it is so surprising that merely short term capital investings have been undertaken over the last two decennaries. Towards the terminal of the old century, there were some capital extensions such as gauntries, larger container countries and straddle bearers. In 2002, more gauntries were added every bit good as 20 straddle bearers. The 2nd portion of the 2002 undertaking was the resettlement and specialization of countries within the port, viz. pier 1. All these short term betterments will ensue in the port holding a present twenty-four hours capacity of 2.5 million TEUs. Already in 2005 the container terminus were runing at 90 % capacity and now 5 old ages therefore, with TEU ‘s handled being 2.4 million in 2009 or 96 % capacity, there is a pressing demand for Durban to increase and better its container managing operations. ( NPA, 2009 and Muller, 2004 )

Though this paper views the port from an economic sciences position, it must be borne in head that this is merely one of the utilizations for the port. The tabular array below, taken from Tempi 2006, illustrates some of the other utilizations of the port of Durban. These include disease direction, diversion, nutrient production, bird safety and preservation. Therefore, there is ever an chance cost for any signifier of enlargement in the port and this must be balanced against developmental conditions of the part. Ports which are located in urban countries as is the instance of Durban, have a great public demand to entree the port for leisure based activities such as seafaring, fishing, paddling, H2O skiing and canoeing. However, if the land around the port has become a voguish topographic point to patronize, the other developments such as eating houses, cabarets and shopping countries would besides offer for the valuable land infinite. Besides port development straight viing with these activities for infinite, the already established developments can enforce a negative outwardness in footings of noise, traffic congestion, negative aesthetics, belongings devaluation and pollution. Using the above to Durban, one can see that the important point developments fall rather clearly in this class. There are many conflicting activities go oning at the same time in the port of Durban and the diversion versus commercial activities is one of them. A premier illustration of this is the development of a Multi billion rand waterfront next to the seaport that includes epicurean belongings developments, an fish tank, a H2O universe and assorted H2O athleticss. Therefore, by implementing substructure to develop the port to manage farther lading, an chance cost is created in the signifier of lost recreational activities.

( IEM, 2006 and Ircha, 2006 )

Mentioning once more to the figure above, it can be seen that the environment and ecological function of the port is rather important. Before the Durban Bay was converted to a seaport, it was a pristine estuarine laguna that was abundant in wild life, workss and swamps. From the 1800 ‘s onwards, after the port became a popular throughput finish, the port bit by bit ceased to be a natural oasis though dredging and building. Thus, even though there are still plentiful bio beings in the port, this sum pales in comparing to what the bay held in its premier and as such there is increasing environmental force per unit area to non make any farther harm to the natural home ground. Most of the original sand Bankss have been lost through dredging, ensuing the staying sandbanks been considered rather indispensable because of their indispensable alimentary part to the neighboring biomass every bit good as their rareness and being value. A factor lending to their being value is their rareness in footings of this type of home ground been merely available in Richards Bay and Durban Bay. A cardinal characteristic of the sandbanks is their stableness which is created by the part which microscopic beings and macro benthal invertebrates make through heightening resiliency and increasing surface country of the sandbank. A higher surface country from the sandbank benefits the bay via the filtrating mechanism that it provides, which ensures that the H2O come ining the bay is slightly cleansed. Besides the sandbanks, there are besides the heritage site position Rhizophora mangles of which about 15 hectares are staying in the bay. These are critical to the bay for biodiversity and sustainability and besides portion the same organic structure of H2O as the grasslands and sandbanks, thereby take parting in the energy transportation belongingss of the H2O medium. There are legion activities that depend on the proper operation of this ecological country, with the most obvious been the angling industry, be it for subsistence or recreational intents, which resulted in 16000 angling excursions in 1987. The 2nd activity is that of come-on roll uping which had a harvested sum of 2.5 metric tons in 1995. Bird observation and academic research are besides frequent activities which depend on a well working ecological system. Forbes and Demetriades ( 2007 ) show that the H2O country of the bay has been reduced by 57 % , the sandbank by 86 % , sea grass by 100 % , bird species by 94 % and the Rhizophora mangles by 97 % . The complexness of the ecosystem means that a simple correlativity between home ground and species loss is nonexistent. Figure 27 below illustrates the ecological losingss of home ground and bird life for selected clip periods. Figure 22 illustrated on an overhead orbiter photograph the location and extent of the sandbanks and Rhizophora mangles. ( Forbes & A ; Demetriades, 2006 ; Mander, 2007 and IEM survey, 1996 )

Figure 28: Port of Durban Habitat Loss

Beginning: Tempo, 2006

An ecosystem by definition is interlinked and as such alterations in one portion of an ecosystem can hold drastic effects in another portion. Deeper and wider channels, brought on through enlargement, could hold a damaging consequence on the sandbank and via interlinked systems on the full ecosystem. This would be farther exacerbated by larger station Panama whose more powerful propellors would do perturbations in the ecosystem every bit good. Harmonizing to the environmental subdivision of the Tempi procedure, there is no executable scenario under which the partial or entire remotion of the sandbanks can be justified. Additionally, the option of rehabilitation, resettlement or replacing is stated to be a hapless replacement for the natural sandbanks as the sandbank type and quality is stated to be rather alone. This is foremost due to the all right deposits of the silt canal and secondly, the physico chemical nature of the ecosystems in the bay. The silt canal in the bay is straight affected through the influx of fresh water via rivers thereby act uponing salt, O degrees and turbidness. This in bend determines the sum and ration of the assorted micro and macro beings in the bay and retroflexing this balance in another location would turn out near impossible. The 1996 IEM survey concurs with this position and shows that taking the sandbanks for substructure intents would hold a damaging consequence on the ecosystem every bit good as 60 hectare loss of H2O country. The IEM survey besides describes the possible negative outwardnesss that would come from larboard enlargements such as traffic congestion in Glenwood and the Berea, the compromising of capital investings on Victoria Embankment and the obstructor of sea positions in environing countries. ( IEM, 1996 and Tempi, 2006 )

The above restraints are absolute restraints in footings of physical obstructions that may impede enlargements. An frequently unmarked restraint is that of efficiency lost or comparative restraints. In a study conducted in 2003 by Jones, assorted houses were asked for remarks and sentiments with respects to this really issue. The consequences were that non a individual respondent viewed the terminus and lading handling services provided by the port as good. Additionally, rail services were seen in the same visible radiation, which is a distressing happening sing how important rail is to bulk services. The study besides showed the deficiency of religion in direction ‘s competency with 64 % saying the deficiency of necessary accomplishments in the port as a major job. Therefore, in a manner, the inefficiency of the direction structures is itself a restraint on the ports enlargement and even current workings. This has come into the bow late because the state of affairs is farther exacerbated by the capacity restraint of the port. ( Jones 2003 )

3.7 Growth Forecast for Durban Containers

It has been shown above that Durban is South Africa ‘s foremost container port. The containers that are handled at Durban port make up 65 per centum of all containers in South Africa and the port of Durban, holding terminal position, is by far the best altered port for this map. It has besides been shown that though containers offer the best return on investing in the signifier of economic linkages, but Durban is enduring from terrible capacity restraints. As shown antecedently, the port direction ‘s response to these capacity restraints has been slow, limited and short sighted. To accurately foretell what sort of extra capacity is needed for the hereafter, one must first cipher the existent lading volumes for the related periods through some signifier of demand prediction. Econometric prediction is gauging a quantitive value about the chance of a future even happening utilizing implicit in basicss ‘ and can be loosely divided into three classs, viz. , transverse sectional, clip series and panel informations. Cross sectional informations analyses a group of informations points at a individual minute in clip. For the intents of prediction, clip series econometrics is the most conventional attack, and this is calculating utilizing informations taken across clip intervals. Panel information is a combination of both transverse sectional and clip series informations and involves analyzing a specific group of informations over a period of clip In order for an econometric theoretical account to be meaningful ; it must be relevant, rational and important. Achieving these demands means theoretical account and informations choice are of the extreme importance and this choice depends on available resources. Time series theoretical accounts vary harmonizing to informations handiness and use and some of the more common theoretical accounts are autoregressive incorporate traveling norm ( ARIMA ) , autoregressive distributed slowdown ( ARDL ) , vector autoregressive ( VAR ) , car regressive conditional heteroscedasticty ( ARCH ) and generalised autoregressive conditional heteroscedasticity ( GARCH ) . Looking at clip series in item is beyond the range of this thesis, but the first three theoretical accounts listed supra will be briefly examined as they are the most common 1s used. After which, we will briefly expression at some container prediction theoretical accounts for the port of Durban. ( Gujarati, 2003 and Stopford, 1997 )

The ARIMA theoretical account is based on two constituents, viz. an autoregressive constituent and a moving mean constituent. The autoregressive constituent means that a current value, say Y, is dependent on a old or lagged value of Y. The moving mean constituent relates to how the error term and its lagged values contribute to the dependant variable, say Y. The term integrated related to how many times the theoretical account must be differenced in order to go stationary. In clip series, a theoretical account is considered stationary if its mean and discrepancy are changeless over clip and the covariance value is dependent on the distance between the two clip periods and non on when the clip periods are. If a theoretical account is non stationary, the arrested development consequences will be specious and inaccurate. See below an illustration of an ARIMA theoretical account which has a changeless, a lagged value of Y and a lagged value on the error term to assist explicate the result of Yt. ( Gujurati, 2003 and Muller, 2004 ) )

The ARDL theoretical account has two parts to it every bit good, an autoregressive constituent which was explained above and a distributed slowdown constituent. The distributed slowdown constituent is merely lagged independent variables that are used to explicate the dependent variable every bit good as lagged values of the dependant variable. When a theoretical account uses both present and lagged values of its explanatory variables, it is a dynamic theoretical account. The ground that slowdowns are used is that many economic sciences reaction take clip to be processed in an economic system, an illustration of which is the involvement rate impact in South Africa which takes about 18 months to be felt in the existent economic system. There are three chief grounds for slowdown. The first is the psychological ground and relates to habitual behavior, fright, optimism and perceptual experience. The following is the technological ground and affect the usage of capital and engineering in the economic system. The last is institutional grounds and to contractual duties. See below an illustration of an ARDL theoretical account where Y is the dependant and explanatory variable, U is a changeless term, X is the independent variable and E is the error term. ( Gujurati, 2003 and Muller, 2004 )

The VAR theoretical account is atheoretic, intending they do non hold any theoretical underpinnings, and uses coincident endogenous variables merely. In all clip series theoretical accounts, to a varying extent, the past informations and relationships between informations flows is extrapolated to the hereafter. It is this really status that sometimes leads theoretical accounts to be wholly incorrect and illustration of which is the current universe recession which no theoretical account predicted. However, by including a large plenty informations set with lagged GDP, old recessions should be included. Predicting any hereafter any future event with certainty is impossible, but theoretical accounts help by delegating chances, and this is why econometrics is frequently considered more art than scientific discipline. The consequences of some econometric times series surveies for the port of Durban ‘s containers demand every bit good as the existent figure of TEUS for selected old ages are illustrated in the figure below. A cardinal structural job, which none of these theoretical accounts reference, was that between the old ages 2007-2009, the universes encountered its greatest recession aka “ the recognition crunch ” since the 1930 ‘s depression. As such the existent figure of TEUS in 2009 is really less than the 2007 figure. Muller ( 2004 ) uses an ARDL, ARIMA and VAR theoretical account to cipher future container volumes for the port for the period 2004-2013, nevertheless since the ARDL had the lowest mistakes, the figures from that theoretical account were used. The 2006 and 2007 anticipations are underestimated, whereas the 2009 figure, likely due to the non-prediction of the recession, are overestimated. Floor and Van Niekerk ( 2001 ) use a consecutive additive equation that depicts the figure of TEUS as a map of GDP. Their anticipation runs from 2000-2020 and is clear from the comparing with the existent TEUS that their theoretical account is non really accurate. This is a clear illustration of how more dynamic theoretical accounts such as those above is more suitable for clip series type informations and anticipations. The official theoretical account used by the Tempi procedure and Transnet has been set abouting by Graham Muller and Associates and is besides an ARDL theoretical account. The theoretical account predicts that that by 2013 Durban will hold about 5 million TEUS go throughing through it, whereas the Muller theoretical account predicts that this figure predicts the 3.75 million TEUS for the same twelvemonth. ( Gujurati, 2003 ; Floor and Van Niekerk, 2001 ; Muller, 2004 and Transnet, 2006 )

The theoretical account used by is forecast until 2036 where the expected TEUS will be in the part of 17 million TEUS. It must be noted that the theoretical account which Transnet used was a medium growing type scenario and if the high growing scenario was used the the sum of TEUS in 2036 would be 25 million. The close hereafter effects that will follow will be congestion, increased costs and holds. In the long term, this could even take to Durban losing its dominant container position.

Figure 30: Durban Container Long Term Forecast ( Medium Growth )

Beginning: Transnet, 2006

3.8 Decision

Therefore the cost and chances of increasing port capacity has many positions, struggles and jobs. Questions of development and sustainability every bit good as environmental parametric quantities all competition to go the dominant position. From the above, it is clear stop spread short term step are non traveling to work out alleviate force per unit area for really long and as such big enlargement options must be considered if Durban is to stay relevant. This is where Durban is at a hamlets in footings of where to turn up an extra container terminus. The theory of CBA was covered in the literature reappraisal and it is through this methodological analysis that this thesis will try to reply these cardinal inquiries.