ICTSI to challenge court ruling on Durban Container Terminal tender

The Philippine port operator International Container Terminal Services, Inc. (ICTSI) has voiced its opposition to a recent ruling by the KwaZulu-Natal High Court in South Africa, which halted Transnet’s selection of ICTSI as the operating partner for Durban Container Terminal Pier 2 (DCT2), a key regional container hub. DCT is Transnet’s biggest container terminal handling 72% of Port of Durban throughput and 46% of SA traffic. The court’s decision bars Transnet from finalising the contract or engaging in any negotiations with ICTSI or third parties until a final ruling is made. While ICTSI stated that it fully respects the court’s authority, the company firmly disagrees with the ruling.

The tender process for DCT2 began in February 2022, with 21 bidders responding to Transnet’s Request for Quotation (RFQ). Ten bidders, including APM Terminals and ICTSI, advanced to the Request for Proposal (RFP) stage. ICTSI was selected as the preferred bidder in July 2023 and officially secured the contract in March 2024. However, APM Terminals contested the award, raising concerns about ICTSI’s solvency calculation.

Specifically, the court ruled that ICTSI incorrectly calculated its solvency ratio by using market capitalisation instead of total equity, as required by the RFQ. While the required solvency ratio was 0.4, ICTSI reported 1.28 by using the different method. The court noted that if ICTSI had applied the correct calculation, its ratio would have been 0.24, leading to its disqualification from the tender. All other bidders adhered to the correct solvency calculation, and no clarifications were sought, confirming the process was clear to participants, the court said.

“ICTSI was selected because it was judged the best operating partner for this strategically critical port and because it submitted the highest financial bid. In March 2024, the Maersk Group filed a legal petition seeking the disqualification of ICTSI and this has consequently resulted in the court issuing an interdict until the petition is resolved. ICTSI maintains that it met or exceeded the tender requirements set out by Transnet and will be countering this case in the appropriate legal manner,” ICTSI said in a comment.

The legal challenge by APM Terminals is unfolding in two stages. After securing the interdict in Part A, which halts the contract, the case will now proceed to Part B, where APM Terminals seeks a judicial review to have the tender award to ICTSI declared invalid and to be named the preferred bidder. Until a final decision is reached in Part B, all actions related to the tender are frozen.