The port of Durban is currently suffering under severe capacity constraints. This has negatively affected efficiency resulting in queuing and berthing delays. If Durban wishes to remain the premier hub status port of the region and Southern hemisphere, then it needs to adequately address the current supply constraints. Shipping vessel operators and owners will not tolerate these inefficiencies indefinitely and if the port does not seek to address the situation, it runs the very real risk of losing patronage in the medium to long term. The obvious response to the supply side constraint is to increase container handling capacity. This dissertation will analyse the expansion options available to the port in this regard. Beside simply increasing capacity, the port needs to increase draught depth at the berths since container vessels are continually migrating to larger sizes to benefit from economies of scale. A key challenge is the fact that the port serves other purposes beyond that of being a gateway for traded goods such as ecological functions and subsistence fishing. This is compounded by the significant environment degradation which the bay has suffered over the last century or so. The port, however, generates significant economic benefits for the city in terms of economic linkages and employment, and for its wider national and regional hinterland, by holding down the generalised cost of the transport of goods. By not expanding capacity, there are significant opportunity costs for Durban and for the port’s wider hinterland. The best way of analysing the benefits and costs of the various options is to conduct a public CBA analysis which monetises and discounts streams of benefits and costs to arrive at a NPV. Several expansion options are examined and include Bayhead, the old DIA site and Richards Bay. An NPV was calculated for each option where environmental externalities were included. The CBA yielded three options with positive NPV’s out of the seven examined. The Southern Access routes, 3CA and 3DA, were both rejected since the effective removal of port sites used presently for the handling and storage of petrochemicals was considered infeasible. One of the Northern Access routes, 1AB, was also rejected since the option yielded a negative NPV. Even though DIA1 had a positive NPV; it was rejected based on mutual exclusivity with option DIA2. Richards Bay was rejected since it had a penalty cost of R89 billion over Durban, due primarily to higher logistical costs. On balance the Bayhead option 1AA and airport option DIA2 were chosen as the projects of choice primarily on the basis of the CBA results. Both these options yielded significantly positive NPV’s and the port should seriously look into their construction as they would provide several years of spare capacity as well as being able to accommodate Post Panamax vessels. / Thesis (M.Com.)-University of KwaZulu-Natal, Westville, 2010.

What is the role of a port? It is a place that handles ships and cargo with operational efficiency. For this reason, ports must be seen as elements in value-driven chain systems or in value chain constellations. They deliver value to shippers and to third party service providers; customer segmentation and targeting is on the basis of a clearly specified value for itself and for the chain in which it is embedded. Ports no longer operate in an insulated environment. They face the same competitive forces that companies in other industries experience. There is rivalry among existing competitors, continuing threat of new entrants, potential for global substitutes, presence of powerful customers and powerful supplies. Since the early 1980s, moves to rapidly liberalise trade and foreign direct investment (FDI) have strongly influenced policy makers in many developing countries in their thinking about this challenge. Openness to international market forces and competition was expected to allow those countries to alter both the pace and the pattern of their participation in international trade, thereby overcoming balance-ofpayments problems and accelerating growth, to catch up with industrial countries. Today, the Port of Durban is the clear African leader in total container throughput. In the world port league for 2000 established by Containerisation International Yearbook 2001, Durban was in 44th position. The Port of Durban is an important gateway with regards to general cargo flows especially since the port's goal is to become a hub port in the Southern Africa. It has great economic value for the city and the country at large. It can be seen that the poor economic and operational efficiency of the port leads to poor overall economic growth for the nation. It is therefore desirable to ensure that the terminal is always operating at optimum operating efficiency with the required infrastructure and capacity in place. / Thesis (MBA)-University of Natal, 2003.