Grindrod, the R8bn JSE-listed industrial logistics operator, is reaping the rewards of its strategic decision to shift focus towards the Maputo port amidst ongoing challenges at South Africa’s key port of Durban. The Maputo Port Development Company (MPDC), in which Grindrod holds an indirect 24.7% stake, recently reported handling a record-breaking 31.2 million tonnes of cargo in 2023, marking a significant 16% year-on-year growth.

The impressive performance resulted in the port contributing over $41 million to the Mozambican government, excluding taxes and dividends to shareholders. The MPDC emphasized that this financial increase solidifies the port’s economic contribution to the country’s development and cements Maputo’s position as a pivotal economic driver in the region.

Maputo Port, strategically located as a gateway to the Sub-Saharan region and the closest port to the Gauteng industrial hub, has become the preferred choice for commodity traders amidst poor service delivery and persistent bottlenecks at Durban port. Grindrod’s consistent investments in upgrading infrastructure have played a crucial role in the port’s success, allowing it to handle a diverse range of cargo, including minerals, grains, sugar, vehicles, bulk liquid containers, and general cargo.

The company’s commitment to enhancing capacity at its dry bulk port terminals in Mozambique, including the expansion of berths, discharging facilities, road infrastructure upgrades, and the implementation of 24-hour operations, has led to a notable shift of cargo away from Durban.

In response to inefficiencies at Durban, Grindrod has also increasingly utilized the Eswatini corridor as an alternative, further optimizing its logistics network. The company’s diversification strategy has seen a more balanced distribution of cargo transport, with 39% now being transported by rail, indicating an 8.4% increase compared to the previous year.

CEO Xolani Mbambo highlighted Grindrod’s collaboration with various rail entities to improve train turnaround times, benefiting export customers. Despite the growth in rail handling, the demand for the port continues to grow exponentially, prompting ongoing efforts to strike a balance between rail and road cargo.

The MPDC’s CEO, Osório Lucas, mentioned measures taken in 2023 to mitigate road congestion, including the opening of the Truck Traffic Management Park in Pessene in November. These initiatives have contributed to the port’s record-breaking volumes and underscore its resilience in the face of regional challenges.

The success at Maputo comes at a time when Durban port is making efforts to overcome its congestion and inefficiencies. According to Transnet Port Terminals, the Durban Container Terminal Pier 2 reduced its vessel backlog to five in December, reflecting the positive impact of turnaround plans announced in November.

In contrast, Cape Town port’s progress has been described as more muted, according to shipping major Maersk. Grindrod, however, reported an impressive 85% increase in cargo handling at its multipurpose terminal in the port of Durban in November, attributing it to the global demand for lithium, a key component in rechargeable batteries.

Looking ahead, Grindrod is actively engaging with the Mozambican government to extend the Maputo port concession from 2033 to 2058. The government’s in-principle approval for the concession extension signifies a potential for increased investment to expand port handling capacity, providing a positive outlook for Grindrod shareholders.

Grindrod’s shares rose 2.10% to R11.68 on Tuesday, reflecting investor confidence in the success of its strategic shift towards Maputo port. As the company continues to reshape regional logistics sector, its commitment to efficient operations and infrastructure upgrades positions it as a key player in Southern African trade.