Economic Impact Assessment

Transcription

1 Economic Impact Assessment For the proposed deepening of berths 203, 204 and 205 of the Durban Container Terminal (DCT). Developed for Transnet Ports Authority by Urban-Econ (PTY) Ltd Year:

2 Table of Contents Table of Acronyms and Definitions... 3 Executive Summary... 4 Section 1: Introduction Description of the Expansion Motivation for the Expansion Methodology Structure of the Report Section 2: Current Trade and Container Shipping Trends National Production and Trade Trends Durban Port Container Trends Berths Container Trends Global Containership Trends Section 3: Economic Impacts Input-Output Economic Model CAPEX Impact Modelling OPEX Impact Modelling Berth Deepening Scenarios and Associated Impacts Concluding Comments Section 4: Scoped Socio-Economic Impacts Subsistence Fishing (Includes Commercial and Recreational) Beach Tourism Traffic Section 5: Integrated Impact Tables Section 6: Conclusion Summary of Findings Recommendations

3 Table of Acronyms and Definitions GVA TEU Deepsea Transhipped Coastwise gt LOA VLCS CRM data SAECS trades TNPA TPT Gross Value Added. A measure of the value of goods and services produced in an economy. In this report GVA is calculated using factor costs. It includes remuneration and gross operating surplus. Twenty-foot equivalent unit. One TEU represents the cargo capacity of a standard intermodal container, 20 feet (6.1 m) long and 8 feet (2.44 m) wide. A shipment coming from or going to an international port The shipment of goods or containers to an intermediate destination, and then from there to yet another destination. From one domestic coastal port to another (e.g. Cape Town to Durban) Gross tonnage measures a ships overall internal volume Length Overall is the maximum length of a vessel's hull measured parallel to the waterline. Very large container ship is a container vessel able to carry 8000 and more TEU Customer Relationship Management data from Transnet Southern Africa Europe Container Services Transnet National Port Authority Transnet Port Terminals 3

4 Executive Summary 1: Introduction This report describes the Economic Impact of the proposed expansion of the Durban Container Terminal at Durban Port. In particular, the expansion includes the deepening and widening of berths 203 to 205 which will allow larger vessels to safely berth, thus increasing the overall economic production gained from the terminal. 2: Current Trade and Container Shipping Trends Productive industries (i.e. manufacturing, agriculture and mining) have shown recovery since the 2009 recession; hence exports and imports have recovered to 2008 levels and continue to show strong growth (11%) placing increasing demand on the port. Volumes of containers handled have increased by 7% on average annually, and also superseded 2008 levels in Evidence shows continued growth in Berths handle 37% of these containers and are therefore critical to the port. It is therefore, evident that the volume of traffic at these berths is increasing. Furthermore, regardless of demand for containers, ship sizes are increasing and will continue to do so into the near future to a point where 3,000-6,000 TEU range ships are phased out and replaced with medium and large sized vessels of 8,000-10,000TEUs. Currently, the terminal can only accommodate ships up to 9,000TEUs (not fully laden) at high tide. If the expansion does not occur, Durban Port will be unable to accommodate an increasing number of containerships and, thus, regional competitiveness of KZN will be reduced. In the long term, this reduced competitiveness will be significant and detrimental to trade in the province and will raise cost of exports by incurring an additional feedering service to a port that can handle larger vessel sizes. 3: Economic Impacts Economic impact refers to the effects on the level of economic activity in a given area as result of some form of external intervention in the economy. The intervention can be in the form of new investment in for example, transport facilities, social developments, housing, business development, the establishment of a new or the expansion of existing production capacity. In this instance, it is the expansion of the Durban Container Terminal. 3.1 CAPEX The economic impact during the construction phase is shown for each of the three construction options. The construction options are Caisson, Deck on Piles, and Sheet Piles (which has the highest component of off-shore expenditure) 1. For all options, only the local capital spend has been modelled and all dredging costs have been excluded. The temporary benefits of the construction process have been shown to include: R3050m to R5494m in new business sales R1083m to R1952m in Gross Value Added R963m to R535m in income multipliers locally (KZN) to temporary work opportunities created through the port construction process. 1 The share of off-shore capital spend associated with the purchase of sheetpile material and backs has been excluded from the modelled data. Only the South African on-shore capture of spend is reflected. 4

5 3.2 OPEX The operational benefits of the expansion to year 2025 have been shown as follows: Using the projections of TEU volumes from TNPA from 2012/ /18 and a medium term growth rate of 8% (post-recession growth) from 2017/ /25, by 2025 TEU traffic projections on these berths reaches over 5 million TEU per annum. This relates to spend of R27 088m first round and a further spend of R induced into supporting services. Employment related to this traffic base is persons. 3.3 Two further scenarios show: The losses in benefits if the berths were only deepened but not lengthened by 170m were shown to include: a loss of direct spend of R16 653m, induced spend of R21 671m and port related employment loss of jobs and total employment loss of jobs over the four years of construction. a loss of direct spend of R1 523m, induced spend of R2119m and port related employment loss of 507 jobs and total employment loss of 1225 jobs over the operational seven years. If the capacity for the Dig-Out Port comes on line, in accordance with the anticipated planning horizon, by 2021 then this loss is reduced to: a loss in direct spend of R554m, a loss in induced spend of R443m and port related employment loss of 185 jobs and total employment loss of 446 jobs over the operational three year period between the end of construction and the availability of initial capacity at the dig-out port The losses in benefits if the expansion does not occur at all were shown to include: No loss of trade for the first 5 years, absolute loss of all CAPEX investment benefit. This equates to a loss of handling capacity of TEUS carried on vessels too large to be berthed if the depth at berths is not increased in the short term, until available capacity at the dig-out port becomes available. Which has a direct spend loss impact of R1961m, induced spend of R1569m, port related employment loss of 852 jobs and total employment loss of 3530 over the period of Scoped Socio-economic Impacts The impact on subsistence fishing, beach tourism, and traffic were flagged as part of the scoping report and raised during public meetings by interested and affected parties. 4.1 Subsistence Fishing: There are approximately 4000 true subsistence fishers on the East Coast of South Africa, but none of these are registered within ethekwini region according to Ezemvelo Wildlife, who maintains the registry. Fishers in ethekwini comprise of small scale commercial and recreational participants. This is, however, an important part of locals livelihoods and Durban s economy. Ecology studies show that there will be no long term impact on line-fish in the bay with mitigation, and during construction there will be a displacement of 50% of the fish within the turbidity plume only (within the bay). There will therefore be an impact on fishers within the bay and slightly along the coast during construction; however, the exact impact is unknown. There is no 5

6 associated impact on subsistence activities per se, as these fishers do not fall into this catchment area. 4.2 Beach tourism: The economic value of the beach to Durban is R260 million for non-resident tourists alone. This figure would be in the billions of rand per year if a resident spend was included. The beach is considered the most important draw-card to Durban for tourists and residents. Any impact on the beaches would be detrimental to Durban s economy. Specialist studies have found, however, that there will be no impact on the beaches or the quality of the water. 4.3 Traffic: Any increase in landed containers will result in an increase in trucks on ethekwini roads. Currently there are 3000 trucks leaving the port in a day. However, planning for this additional volume of road freight traffic on domestic roads adjacent the port precinct is mitigated by ethekwini s freight plan and TNPAs projects to increase road capacity, which has taken into account projected growth in port traffic in line with Transnet s projections. Furthermore, the economic impact on increased truck business and related truck servicing and production industries will be positive. 5 Recommendations 5.1. The results of the Economic Impact Assessment show that the economic benefits for extending and deepening the berths at Pier 2 are significant and, therefore, warrant full development to go ahead The benefits are equal across the three construction types in the operational phase and the variation between the three options during construction phase is not significant enough to warrant a preference. 6

7 Section 1: Introduction This report describes the Economic Impact of the proposed expansion of the Durban Container Terminal at Durban Port. In particular, the expansion includes the deepening and widening of berths 203 to 205 which will allow larger vessels to safely berth, thus increasing the overall economic production gained from the terminal. 1.1 Description of the Expansion The map below shows the location of the relevant berths within the port. FIGURE 1 MAP SHOWING LOCATION OF BERTHS 203 TO 205 Source: Nemai Consulting (May 2012) Deepening, Lengthening and Widening of Berth 203 to 205, Pier, Container Terminal, Port of Durban, FINAL SCOPING REPORT The proposed upgrade would include the following activities: 1. The westward lengthening of Berth 205 by 170m; 2. The eastward lengthening of Berth 203 by 100m; 3. The seaward widening of Berths 203 to 205 by 50m; 4. The deepening of the berth channel, approach channel and vessel turning basin from the current -12.8m CDP to -16.5m CDP; 5. Three technical options will be considered namely, the Deck on Pile option, Sheet Pile option and the Caisson option. For the Caisson option, a trench will need to be excavated to -19m CDP; 6. The precasting of beams; storage of sheet piles or construction of caissons (for the Deck on Pile, Sheet Pile and Caisson option respectively) would take place at Bayhead Lot 10; 7. The offshore disposal of dredge material; 7

8 8. The offshore sand winning for infill material; and 9. The installation of new Ship to Shore (STS) cranes and associated infrastructure. 1.2 Motivation for the Expansion Providing operating capacity ahead of the demand has become an essential element of managing national logistics capability in a fast changing and competitive global economic environment. Included in these commitments will be the necessity of providing major container capacity enhancements along the highest demand logistics corridor in the country in the form of increasing container handling capacity at the Port of Durban. The proposed expansion of the DCT offers this in line with existing market provision of extensive logistics capabilities. The Port of Durban is the gateway port in the South African ports system which plays an important role in facilitating the import and export needs for much of South Africa. The existing Blockwork Quay wall structure along Pier 2 Berth 203 to 205 was designed in the 1970s, to support dockside cranes with a lifting capacity of 4 tonnes and a water depth of -12.8m Chart Datum Port (CDP). This allowed for the safe berthing of vessels with a fully laden draft (vertical distance between the waterline and the bottom of the hull) not greater than -11.8m CDP. At present the existing quay wall structure is operated beyond its original design parameters. Recent studies have concluded that the existing quay walls do not meet the minimum Eurocode 7 Safety Standards and that there is a risk of potential quay wall failure 2. Current trends show the number of containers handled at the port increasing by 7% on average each year over the previous decade (albeit with a recession in growth over 2008/9) 3. In addition, vessel sizes have increased since the original terminal was constructed and Berth 203 to 205 cannot therefore safely accommodate fully laden new generation container vessels due to insufficient water depth at these berths. At present these vessels enter and exit the Port partially laden and during the high tide window. This is an unsafe operating condition and the risk exists that vessels could run aground. Transnet National Ports Authority (TNPA) has proposed the deepening, lengthening and widening of Berth 203 to 205 in order to improve the safety of the berths as well as to improve the efficiency of the Port 4. Given the positive relationship between economic growth and trade, it is expected that the trade resulting from the economic activity within the port system have a significant positive economic impact on both the local regional economy as well as on the wider hinterland economies serviced by the total system and hence at a national level. The Port System is a hub of numerous and diverse economic activities involving a range of economic actors. Once vessels call at port, or when cargo passes through wharf side, the economic activity is energised in a myriad of areas. The economic impact of improved efficiency at the port, therefore, will not be confined to the port alone but will have a significant impact on the local economy as a whole. The value chain of a container terminal is extensive, and the economic impact is, therefore, equally extensive. The next section describes the methodology used to measure the extent of this impact. 2 Prestedge Retief Dresner Wijnberg (PRDW) (2011). Pre-Feasibility Study Report for the Proposed Berth Deepening of Berths 203 to 205 at DCT. PRDW Report No. 1079/0/003/REV01. 3 National Port Authority of South Africa container traffic recorded as per cargo due issues 4 Nemai Consulting (May 2012) Deepening, Lengthening and Widening of Berth 203 to 205, Pier, Container Terminal, Port of Durban, FINAL SCOPING REPORT 8

9 1.3 Methodology The economic impact of the ports on their hinterlands and local economies is not measured in tons of cargo, in TEUs (twenty foot equivalent unit) or in gross tonnage (gt) of vessels utilising the port, rather, it is measured in terms of persons employed in port-related economic activity, and in cycles of expenditure that originate in the port, and reverberate through the economy of the region. Importantly, it examines the linkages that are forged between the maritime cluster and other commercial and industrial groupings within the economy. For instance, ships make use of marine infrastructure and marine services provided by the port authority, they utilise a range of port terminals that are provided by Transnet and by a number of private terminal operators, they require the ships husbandry services made available by ships agents, ship chandlers and bunker suppliers, their crews need transport services, medical services and recreation, and they provide custom from time to time for local ship repairers, with their deep and rich linkages into the steel fabrication, engineering, painting and outfitting industries. A much broader array of economic activities surrounds the cargo handling and logistics process. Cargo is handled physically in port terminals and by stevedores, it is distributed by road, rail and by pipeline, its documentation, financing and on-carriage is facilitated by the employment-rich clearing & forwarding industry, it requires storage in warehousing facilities, it is scrutinised by customs officials, and its seamless progress to consignees and from suppliers is tracked by freight logistics professionals 5. In order to calculate the economic impact of increased number of calls and containers handled at berths , each of these ship services need to be taken into account. In this case, the spend of an average call at pier 2 on each of these services was calculated in order to determine the injection into the economy per call. Economic multipliers that calculate the increase in sales, income, gross value added (production) and jobs generated per R1 spent are used to transfer the total call spend into a measure of the impact on the economy. An average call at pier 2 handles 2300 TEUs (one TEU represents the cargo capacity of a standard intermodal container) according to TPT, with a calculated related spend impact of R12.3million through the local and regional economy. The expansion of pier 2 will allow for this average call rate to increase, and hence the injection into the economy will be able increase accordingly. This is referred to OPEX (operational expenditure) economic modelling. The economic impact of CAPEX (capital expenditure) is calculated by applying these multipliers to the level of investment made by Transnet during the construction of the expansion. The direct and indirect impacts of the OPEX and CAPEX make up the total economic impact of a given project, in this case, the expansion of the Durban Container Terminal. Once the operational and capital expenditure impact have been calculated, the socio-economic costs can be incorporated. These impacts have been raised as part of the Scoping Report and as part of the public participation process. Particular impacts flagged include the impact on subsistence fishermen and recreational users of the port. The full set of socio-economic benefits and costs are then assessed in table format. The diagram below outlines the steps in the methodology. 5 Urban-Econ, 2009, South African Ports Sector Review ; developed for the National Ports Regulator of South Africa. 9

10 FIGURE 2 METHODOLOGY Source: Urban-Econ Structure of the Report Given the above methodology, the structure of the report is as follows: Section 1: Introduction Section 2: Current Trade and Container Shipping Trends o This includes national trade trends, current container volumes being experienced at the DCT and at pier 2 specifically, as well as, global trends in the size of container ships. Section 3: Economic Impact o This includes the IO Modelling on CAPEX and OPEX as described in the methodology. Section 4: Scoped Socio-Economic Impacts o This includes a brief description of the relevant socio-economic impacts as raised in the scoping report and by various members of the public. Section 5: Integrated Impact Table o This table provides a summary of all the social and economic impact considered as part of this economic impact assessment. Section 6: Conclusion o This includes the recommendations 10

11 Rand Millions ECONOMIC IMPACT ASSESSMENT FOR THE EXPANSION OF BERTHS 203, 204 AND 205 AT THE Section 2: Current Trade and Container Shipping Trends The following section describes the container shipping trends at Durban Port, at the relevant berths ( ) and internationally. It also describes current trade trends and how they relate to production in South Africa and KZN. This allows us to understand the economic value of the industry and the reasons for infrastructure development, given current growth trends. 2.1 National Production and Trade Trends The graph below describes export and import trends in South Africa for the previous 11 years. In this time, imports and exports have grown by 12% and 11% respectively. Similarly, growth in production measured using GVA (gross value added) has grown by 11% in this time. The trend lines in the graph below show how both the primary and secondary sector correlate with the level of imports and exports (trade). Trade and production rely on each other. The majority of this trade is done through Durban Port and therefore, as production increases, so will demand for the port Export Trends for South Africa South Africa Primary sector South Africa Secondary sector South Africa Imports South Africa Exports - FIGURE 3 EXPORT TRENDS FOR SOUTH AFRICA, Source: Quantec Dataset, 2011 The graph below shows trade trends for KwaZulu-Natal, of which the significant majority (over twothirds) is derived from activity ethekwini s economy. KZN is slightly different to the rest of the country in that its trade is generated primarily by the secondary sector (manufacturing) and to a lesser by the primary sector (agriculture and mining). Since 2009, the manufacturing sector has been showing good recovery, and thus, in 2011, exports and imports have reached 2008 levels once again. This positive growth in GVA and trade indicates a growing demand for port infrastructure. 11

12 Rand Millions ECONOMIC IMPACT ASSESSMENT FOR THE EXPANSION OF BERTHS 203, 204 AND 205 AT THE Export Trends for KZN Kwazulu-Natal Primary sector Kwazulu-Natal Secondary sector Kwazulu-Natal Imports Kwazulu-Natal Exports - FIGURE 4 EXPORT TRENDS FOR KZN, Source: Quantec Dataset, Durban Port Container Trends The graph below gives the number of TEUs (one TEU represents the cargo capacity of a standard intermodal container) that landed at Durban Port between 2003 and The trend shows that the majority of containers are deepsea, and these deapsea incoming shipments have been growing on average annually at 7.7% since Transhipped containers have grown at 6% on average annually, although have reduced for the previous two years. The volume of coastwise containers is significantly less than the other two categories and has experienced a negative growth rate of -7.9% since Overall, the number of landed containers has grown at an average annual growth rate of 7.2% over the period. 12

13 6M Units (TEUs) 6M Units (TEUs) ECONOMIC IMPACT ASSESSMENT FOR THE EXPANSION OF BERTHS 203, 204 AND 205 AT THE Containers Landed in Durban Port, DEEPSEA COASTWISE TRANSHIPPED FIGURE 5 CONTAINERS LANDED IN DURBAN, Source: National Port Authority of South Africa The graph below shows the number of containers (measured in TEUs) shipped from Durban Port. The trend for container shipments is similar to that of containers landed at Durban Port. Deepsea shipments make up the majority of all shipments, and have been growing at an average annual rate of 6.7%. Transhipments have been growing at 8.4% and Coastwise shipments at 3.9%. Overall, the number of shipped containers has grown at an average annual rate of 6.9% over the period Containers Shipped from Durban Port, DEEPSEA COASTWISE TRANSHIPPED FIGURE 6 CONTAINERS SHIPPED FROM DURBAN, Source: National Port Authority of South Africa The following table describes the volumes of containers handled at Durban Port across various categories in The total number of TEUs handled in 2011 was Due to the recovery in the manufacturing sector and the KZN economy in general, volumes of containers shipped have reached 2008 levels and both shipped and landed containers continue to grow. The proportion of TEUs shipped versus landed in 2011 was exactly 50/50 and the proportion of TEUs that were full was 76%, and empty was 24%. 13

14 TABLE 1 DURBAN PORT STATISTICS EXPRESSED IN 6M UNITS (TEUS), 2011 FULL EMPTY TOTAL LANDED: DEEPSEA COASTWISE TRANSHIPPED TOTAL LANDED SHIPPED: DEEPSEA COASTWISE TRANSHIPPED TOTAL SHIPPED GRAND TOTAL Source: National Port Authority of South Africa The following graph gives a comparison of the period January to May for 2010, 2011 and The graph reflects that the positive trends described above are continuing thus far in 2012, with only the number of transhipped containers reducing in FIGURE 7 CONTAINERS HANDLED, Q1 2010, 2011, Berths Container Trends 37% of all containers handled at the port are handled at berths which indicates the importance of these berths to the container handling capacity of the port. These berths are located on pier two which is the only area that has direct access to rail (Gauteng bound). The graph below shows that berth 205 handles 51% of all containers at pier 2, while berths 203 and 204 handle 25% each. 14

15 TEUs ECONOMIC IMPACT ASSESSMENT FOR THE EXPANSION OF BERTHS 203, 204 AND 205 AT THE TEUs Handled at Berths TEUS Landed TEUS Shipped Berths FIGURE 8 TEUS HANDLED AT PIER 2, BERTHS 203, 204 AND 205 Source: Transnet Ports Authority While the existing profile of vessels berthing at berths is described by the liner trade as feeder sized, with an average gross tonnage of a vessel at these berths is gt (gross tonnage measures a ships overall internal volume) and the average length overall is 180m 6 (length overall is the maximum length of a vessel's hull measured parallel to the waterline). These berths do accommodate large vessels up to 345m LOA and it is for this reason that the expansion has been proposed. The expansion is particularly important if, as expected, the average vessel size is going to increase significantly over the next 10 to 20 years this is described in detail in the following section. SUMMARY BOX: Trends in allied economic and port performance Productive industries (i.e. manufacturing, agriculture and mining) have shown recovery since the 2009 recession; hence exports and imports have recovered to 2008 levels and continue to show strong growth (11%) placing increasing demand on the port. Volumes of containers handled have increased by 7% on average annually, and also superseded 2008 levels in Evidence shows continued growth in Berths handle 37% of the entire ports containers and are therefore critical to the port. 2.4 Global Containership Trends After a capacity increase of 7.9% in 2010, cellular containership capacity is expected to grow by 8.1% in 2012 and 10.3% in 2013, based on BRS-Alphaliner projections, with net global fleet increases of 1.4m TEU in 2012 and 1.8m TEU in The table below shows the number of existing container ships and their capacity (measured in TEUs), as well as the number of containerships on order. It is clear in the table that the capacity growth is unevenly distributed, with ships over 4,000 TEU representing 87%-90% of the total capacity delivered during these two years. Half of the expected 6 CRM data provided from Transnet National Port Authorities 15

16 capacity to be delivered in 2012 involves ships above 10,000 TEU. This trend is likely to continue as large fixed port costs and high fuel oil prices, hovering at $ per tonne, actually encourage the use of the largest possible units on long haul routes as they allow operators to spread prohibitively high port and fuel oil costs over a larger number of containers. This gives an impetus to carriers employing such ships, and put those without them at a disadvantage. Some carriers, notably Evergreen, may return to the shipyards in 2012 to order larger ships for this reason. TABLE 2 EXISTING ORDER BOOK AS AT DECEMBER 2011 Source: Barry Rogliano Salles Annual Review 2012 Most of these large ships are earmarked for deployment on the Far East-Europe route. As a consequence, medium-size VLCS of 8,000-9,000 TEU displaced by 10,000+ TEU ships are increasingly finding their way onto north-south trades (emerging markets such as Africa being affected in this way). Furthermore, the 8.1% fleet growth expected for 2012 presents a serious challenge for the industry, as the demand growth is expected to weaken to 6.5%, against almost 8% growth in This imbalance is leading to a build-up of excess ships. The 3,000-6,000 TEU range is likely to be the most affected. Many ships in this size range are expected to be displaced by larger ships, with no ready market to fully absorb large chunks of this redundant tonnage 7. At present, a typical caller to DCT is approximately gt, with a typical capacity of TEU, this is derived from the CRM data provided from Transnet National Port Authorities. However, the indications are clear that the global phenomenon of larger vessels is becoming a reality on the southern trade, with local liner operators anticipating the downward cascading of larger vessels currently on the Europe-Asia and Europe-North America routes. Industry insiders reflect that there is a 5 10 year window until Durban can expect average callers to be sized TEU, this he sees as a cascade down from their Europe-Asia and Europe-North America trade fleets. It is anticipated that the SAECS trades, which have purpose built vessels will be slower to change. As markets continue to expand in Africa, there will be a need to use larger vessels. For this trade, it is not anticipated that the liner trade will require carriers of TEU category for the next decade. Currently, DCT does handle callers at the TEU threshold, however, these vessels are not operating fully laden. 7 Barry Rogliano Salles Annual Review

17 Liner comment also reflected that if DCT doesn t deepen sufficiently to meet new draught requirements of larger vessels, then it is likely that the trade would consider in the medium term calling at Coega and feedering cargo onto the Port of Durban. The impact of this is that there would likely be higher cost passed onto the cargo owner per TEU and in addition, it could be anticipated that given the close proximity (14hrs) by road, that container traffic could be redirected onto road which would reduce absolute port caller numbers. The cost per TEU of ship-time in port is an increasing function of ship size 8. Figure 2 below shows that as vessel size increases, average costs decrease (line) but total costs increase (histogram). As mentioned, the average costs decrease due to the large fixed port and fuel costs making it advantageous to increase ship capacity. The total costs increase with vessel size, however, because turnaround times at the port increase. It is, therefore, vital that capacity at the DCT is increased to match the increase in large vessels through infrastructure investment such as this berth expansion project and the current increase in capacity of the crane configuration in the port which is seeing 30 staff being added to pier 2 alone. If this does not occur, it will become increasingly cost inefficient for vessels to use Durban Port resulting in increased shipping prices for local importers and exporters in particular. FIGURE 9 INCREASE IN TOTAL COSTS (HISTOGRAM) AND DECREASE IN AVERAGE COSTS (LINE) PER DAY AS A FUNCTION OF CONTAINERSHIP SIZE IN 1997 Source: Cariou and Haralambides (1999), Cariou (2000) The following table describes the recorded average vessel and port turnaround time at pier 2 from April to December It also shows the key performance indicator for each of these. The average turnaround time for a container vessel calling at Pier 2 is 60 hours (2 and a half days) 9, and the 8 Haralambides E. H., Benacchio M., Cariou P. (2002) Costs, Benefits and Pricing of Dedicated Container Terminals, International Journal of Maritime Economics Vol. 4-1, March, pp If the vessel arrives 2 or 3 days earlier than the ETA given to the terminal then this time is not included in the calculation. If there are transhipment connections which the Line needs to take place and the on-carrying vessel arrives before the precarrying vessel so cannot be worked then this time is also not included in the calculation. 17

18 average port turnaround time is 141 hours (just less than 6 days). However, the key performance indicator for both these is 40 hours (less than 2 days). It is vital for trade in South Africa that the port is efficient. Efficiency will determine Durban Port s ability to remain competitive as vessel sizes and volumes increase. TABLE 3 KEY PERFORMANCE INDICATORS FOR PIER 2, DCT Indicator April May June July Aug Sept Oct Nov Dec Target Vessel Turnaround Time Hours Port Turnaround Time Hours Source: Durban Container Terminals, DPC presentation, December 2011 Currently, the average call-size is 1,770 moves (using information from 1 April 2012 to-date). Several cranes have been purchased by Transnet in order to increase the number of moves. The crane configuration after January 2013 will be: North Quay (Berths ): 2 Liebherr twin lift cranes, 1 Impsa single lift carne and 7 ZPMC tandem lift cranes = 10 East Quay(Berths ): 6 Noell single lift cranes South Quay Berth (108/9): 4 Liebherr twin lift cranes Pier 1(Berths ): 6 Liebherr single lift cranes. The 7 new tandem lift cranes will assist reduce handling inefficiencies, and support faster turnaround times for vessels. This is anticipated to a 10% gain in efficiency, which will reduce vessel turnaround times by 9 hours 10. SUMMARY BOX: Relevance of current container shipping trends to DCT The consequence of these factors for the Durban Container Terminal is that, regardless of demand for containers, ship sizes are increasing and will continue to do so into the near future to a point where 3,000-6,000 teu range ships are phased out and replaced with medium and large sized vessels of 8,000-10,000teus. Currently, the terminal can only accommodate ships up to 9,000teus (not fully laden) at high tide. If the expansion does not occur, Durban Port will be unable to accommodate an increasing number of containerships and, thus, regional competitiveness of KZN will be reduced. In the long term, this reduced competitiveness will be significant and detrimental to trade in the province and will raise cost of exports by incurring an additional feedering service, at best, to a port that can handle larger vessel sizes and at worst, losing out on the trades to other ports on the eastern sea-board of Africa that are undertaking these necessary in-situ upgrades. 10 TPT estimates,

19 Section 3: Economic Impacts This section provides an initial quantification of the economic impact of the proposed expansion of berths at the DCT. Economic impact refers to the effects on the level of economic activity in a given area as result of some form of external intervention in the economy. The intervention can be in the form of new investment in for example, transport facilities, social developments, housing, business development, the establishment of a new or the expansion of existing production capacity. In this instance, it is the expansion of the Durban Container Terminal. 3.1 Input-Output Economic Model In order to quantify the economic impact of the proposed expansion, an input/output model was used. The model contains information on inter-sector relations, including tables that describe, for each sector included in the model, the amount of input the sector requires from other sectors to produce one unit of output. It is thus a set of equations describing the relationships that link the output of one industry with all other industries in an economy. These models are able to estimate impacts within each industry in the model and thereby provide much more information than simple total economic impacts on income, output, and employment. Using, for example, new investment or operational expense data, multipliers are calculated to estimate different impacts of development investment and its ripple effects through the economy. Measures of input also take into account imports and exports to and from the specific geographic area. Impact Measurement Direct and Indirect: The economic impact in this regard is defined as effects on the level of economic activity in South Africa and the benefit to the economy, such as the generation of additional jobs, business sales, and/or disposable income. To quantify the most likely economic impact of a new business or expansion of an existing activity into a specific area, two types of economic impact can be measured, namely, direct and multiplicative impacts. The direct economic effects are generated when the new business creates new jobs and purchase additional goods and services to operate the new facility. The multiplicative effects can be grouped into two distinct effects: indirect and induced. The indirect economic effects occur when the suppliers of goods and services to the new business experience larger markets and potential to expand. Induced impacts: The induced impacts are the impacts on goods and services demanded due to increased expenditure by households from income earned due at the project. 3.2 CAPEX Impact Modelling The economic impact during the construction phase is shown for each of the three construction options. The construction options are Caisson, Deck on Piles, and Sheet Piles (which has the highest 19

20 component of off-shore expenditure) 11. For all options, only the local capital spend has been modelled and all dredging costs have been excluded. The associated costs per engineering option reviewed: TABLE 4 ENGINEERING OPTIONS CAPEX OPTION RAND VALUE Caisson Deck on Piles Sheet Piles The economic impact on each the following indicators are given: New Business Sales Gross Value Added (economic production) Income and Job creation. TABLE 5 IMPACTS ON NEW BUSINESS SALES NEW BUSINESS SALES MULTIPLIER PER R1 SPENT (Rm) Total Direct Indirect Caisson Deck on Piles Sheet Piles As indicated in the table, the capital expenditure of the proposed development will lead to the direct expansion of business sales (production) by R3 050m to R5 494m depending on the construction option chosen, during the Capex phase. The majority of the affected parties are anticipated to be located locally as source suppliers to the construction industry. The increase in business sales will mainly be noted in the construction sector, as the demand for concrete and other inputs will be spurred by this development. Specific input items like concrete, steel, rock are anticipated to drive these new business sales. In addition, the increase in direct business sales will have positive spin-off effects on the supporting businesses, for example, plants and factories that manufacture construction materials and other inputs required for the port infrastructure. A total of R1 697m to R3 056m in new business sales will be generated as the result of the indirect impact on the development s capital expenditure. TABLE 6 GROSS VALUE ADDED GROSS VALUE ADDED MULTIPLIERS PER R1 SPENT (Rm) Total Direct Indirect Caisson Deck on Piles The share of off-shore capital spend associated with the purchase of sheetpile material and backs has been excluded from the modelled data. Only the South African capture of spend is reflected. 20

21 Sheet Piles Gross Value Added reflects the rand values for the goods and services produced (less the cost of raw materials and inputs). The measure provides the basis for determining impact on gross domestic product as it provides a mechanism to measure the additional output produced as a result of the economic intervention of expanding DCT. As reflected in the table above, GVA indicates a direct impact of R448m to R807m as a result of the Capex spend on the Pier 2 expansion, and a further indirect/induced impact of R636m to R1145m. In total this provides a GVA impact of R1 083m to R1 952m depending on which option is chosen. TABLE 7 INCOME MULTIPLIERS INCOME MULTIPLIERS PER R1 SPENT (Rm) KZN Impact Total Direct Indirect Caisson Deck on Piles Sheet Piles The income multipliers above reflect the KZN anticipated impact 12. Additional income generated as a result of the construction phase of the development is totalled at R 535m to R963m. The directly attributed wage bill for work both on site and for immediate first round impacts is estimated at R237m to R427m. Many of these jobs are likely to be filled by local residents as the closest source of labour, which will significantly increase the disposable income levels within the Durban area. Additional income of R298m to R536m is likely to be generated through indirect mechanisms. TABLE 8 TOTAL TEMPORARY EMPLOYMENT OPPORTUNITES DURING CONSTRUCTION PHASE Total Temporary Job Opportunities Total Direct Indirect Caisson Deck on Piles Sheet Piles Lastly, the number of temporary employment opportunities is provided. It is anticipated that to temporary job opportunities will be created depending on what option is chosen. Directly related employment is likely to rise by to persons and this impact is most likely to be felt in the construction sector. In addition, to positions will be created through indirect impact, and these are likely to be in the manufacturing and tertiary sectors. Typically, employment is equated solely to the number of jobs generated, however in measuring the impact of large scale capital projects such as the Pier 2 deepening additional considerations must be included: the capital intensive nature, due to the engineering requirements, and the phasing in distinct phases where part-time and/or contract workers are likely to be used must be considered in the model, otherwise there is a potential to create a misleading assessment resulting in an 12 This figure has been derived using the KZN I-O model, and is provided as there is a higher level of certainty with the regional impact than the national impact with regard to anticipated income changes at household level. 21

22 exaggeration of economic impact. The model takes the nature of the development and the local spend consideration into account in deriving the job opportunities. In this model, employment impacts are measured in terms of the number of temporary jobs generated over the capital construction period, these are referred to as temporary as the these opportunities are likely to be taken up by equally over the phased development time frame. Permanent employment opportunities are measured based on increased operational (OPEX) output, and are described in the following section. 3.3 OPEX Impact Modelling A considered method for measuring the economic impact of the port at the operational impact modelling level focuses on expenditure flows associated with additional port activity. To this end, the operational impact has been modelled using a typical spend profile of a 2300 TEU container call by an average sized gt vessel 13. The following assumptions about intermodal and destination: an 85%/15% road/rail split of cargo distribution and 35%/65% split of container volumes across Durban/non-Durban cargo owners 14. To reduce the double count on the road split, the figures in the table allows for short-haulage to a de-stuffing warehousing and re-parcelling of container goods. This method takes a representative container vessel working 2300 TEU of container cargo by traditional stevedoring services over a typical 4 day port visit 15. A conservative view is taken of expenditure flows, as these are limited to direct port-ancillary activities 16, without considering expenditure generated in the family of locally-based cargo owners (importers and exporters); and expenditure flows are expressed initially in direct, first-round terms, without taking account of multiplier effects. The port is consequently seen purely as a cargo-handling interface without regard for the origins and destinations of cargo. The typical spend profile per vessel is shown on below in table 7. TABLE 9 PROFILE OF CONTAINER VESSEL SPENDING, EXCL CARGO DUES, CURRENT TRAFFIC AND TARIFF LEVELS, 2012 Item/Service Expenditure % total R TNPA marine infrastructure & services TPT Terminal charges Stevedoring & Lashing/Securing Ships Agency Ship Chandlers Clearing & Forwarding and Warehousing Container depots, logistics etc Road haulage Rail charges Based on TNPA CMR data for 2011 and year to date Based on industry inputs from clearing and forwarding industry and haulier industry provided during June Average turnaround time for a container vessel calling at Pier 1 or Pier 2 is around 62 hours with and average call-size of about 1,770 moves (TNPA: 22 June 2012) 16 It should be stressed that this relates solely to port-ancillary activities that is, to economics activities that would not exist in the absence of a port of Durban and do not include port-using cargo owners, however intimately many of these might be dependent upon the port. 22

23 Ship repair services Bunkers & fuel Miscellaneous medical, crew transfers etc TOTAL EXPENDITURE PER CALL PER VESSEL DIRECTLY RELATED SPEND Source: Urban-Econ: Based on Industry Interviews, June The table indicates a total direct spend of R per visit by container vessels, this includes bunker (fuel) spend. This spend is then circulated through the multiplier effect to a range of indirect and induced beneficiaries in supporting industries, promoting employment opportunities in allied industries that support the port cluster, industries ranging from manufacturing through to business services. In order to present the impact of the port over the lifetime of the infrastructural asset base, the spend profile impacts is shown for specific years of the operational phase of the expanded berths. This shows a depth of linkages between port traffic levels and associated (port and petroleum) as well as non-port industry. The induced spends indicate the multiplier effect impact. Importantly, the traffic growth supports broad employment opportunities. The TEU figure is derived using the proposed TNPA model for the expansion plan, and the spend per TEU is based on vessel spend for an average 2300 TEU container vessel. Direct first round post cluster spend reflects spend to port related businesses. Induced spend makes use of the transport sector multipliers Total spend is the sum of direct and induced spend. Port Related Petroleum Industry Employment was derived using a petroleum multiplier, weighted for the percentage of bunker trade as a share of total sector Wider economy employment examines the induced employment provided by the increase in port traffic figures. Total employment is the sum of all three employment categories. 23

24 TABLE 10 SPEND PROFILE IMPACTS FOR PROJECTED NEXT 13 YEARS (2012/ /25) FOR THE OPERATIONAL PHASE IF THE FULL DEEPENING IS ACHIEVED 17 Year TEU PROJECTIONS at PIER 2, BERTHS First round port cluster spend (Rm) Induced supporting services spend (Rm) Total Port Cluster Employment Port Related Petroleum Industry Employment Wider Economy Employment Total Employment 2012/ / / / / / / / / / / / / TNPA projections provided to Urban-Econ projections (medium growth) scenario applied from

25 Using the projections of TEU volumes from TNPA from 2012/ /18 the following is evident: First round impact spend equates to R10 599m in the local economy, and a further induced spend of R8 479m in 2012/13. This has an overall impact of employment of persons. Using this growth rate in TEU, by 2017/18 the traffic base in TEUs is estimated at just under 3m TEU, with an equivalent impact of R28 450m (direct and induced spend) and an employment profile of persons. Using a medium term growth rate of 8% of (post recession growth), by 2025 TEU traffic projections on these berths reaches over 5 million TEU per annum. This relates to spend of R27 088m first round and a further spend of R induced into supporting services. Employment related to this traffic base is persons. 3.4 Berth Deepening Scenarios and Associated Impacts The following section relates this growth rate projected in 3.3 above to three scenarios of development, and tests whether or not this economic activity will be able to be captured in the regional economy as anticipated if the deepening of the nominated three berths does not occur as per Transnet planning in this EIA submission. Currently, Pier 2 is 914m in length. A standard large vessel caller to Pier 2 is 350m in length and a typical feeder (smaller) vessel is 220m in length. Each large vessel requires 40m on either side in order to safely berth therefore each larger caller actually requires 430m. During construction it will be necessary to decommission 1 berth and keep two berths operational at any time. The three scenarios: Full development takes place; Limited development, deepening but no extension to Pier 2 at berth 205 by the proposed 170m; and No development takes place These scenarios are detailed in the table, and take into account that there is a 4 year construction period (mid 2013 to end 2017) anticipated for the deepening of berths 203, 204 and 205. In addition, these scenarios take into account the anticipated Durban Dig-Out Port depth capacity becoming available by

26 Scenario De-Commissioning of Berth During Construction (mid ) Impact Full No loss of handling facilities as single berth decommissioning can development be accommodated during this period in other parts of the port. No Extension During construction it will be necessary to decommission 1 berth to Berth 205 and keep two berths operational at any time. If we do not have expansion of 170m, and decommission one berth then there will be an effective quay side of 484m operational for the duration of the construction period (4 years). This means only one larger or one smaller vessel will be able to berth at any time. Effectively reducing the number of TEUs handled at Pier 2 during this period by a third (or 12% in the port of Durban as these berths handle 37%) of the total container traffic base. This equates to lost TEUs. This equates to a loss of direct spend of R16 653m, induced spend of R21 671m and port related employment loss of jobs and total employment loss of jobs over the four years. Post Construction (2018 onwards) Impact No loss of handling anticipated. In the short term the port is in the process of recovery and is yet to reach the volumes and growth that was being experienced at the peak of Thus, in the short term it is unlikely that this will cause any loss in trade. However, in the long term the opportunity cost increases substantially if the port is unable to accommodate increasing volumes of large vessels servicing the Africa-Far East trade and the Africa-Near East trade. Specifically, if the rate of change of 3% on vessel size upwards is applied, a loss in TEU handling of is anticipated from 2018 to 2020 (after which time, it is assumed that the Dig-Out Port will be operational). The loss in handling capacity is due to the effective inability to berth three larger vessels simultaneously at these berths. It is anticipated that due to the additional draught requirements of these larger vessels they will not be easily accommodated within the port. While it may appear a small number of containers however this equates to a loss of direct spend of R554m, induced spend of R443m and port related employment loss of 185 jobs and total employment loss of 446 jobs over the three years before the Dig-Out Port comes on line. This rate of change in vessel size will grow more rapidly after 2025 and losses incurred due to the lack of extension could result in zero rate of traffic growth to the terminal before the full capacity of the proposed dig-out port is available. No During this recovery period (continuing through construction Significant loss of TEU traffic ( TEU) is anticipated from

27 development takes place phase) this will not cause any loss in trade. The anticipated shift towards larger vessels is to occur in a five year time frame, at a changeover rate of 3% per annum on the Southern trades, therefore, no direct impact anticipated during construction on the loss of handling within the Port of Durban. However, and absolute loss off all anticipated impacts derived from the CAPEX phase occurs, this equates to a loss of: R3050m to R5494m in new business sales R1083m to R1952m in Gross Value Added R963m to R535m in income multipliers locally (KZN) to temporary work opportunities created through the port construction process. to 2025 if the deepening of the berths is not undertaken. This ten year period reflects the anticipated short term transition to larger vessel stock in the Southern trades. This equates to a loss of handling capacity of TEUS carried on vessels to large to be berthed if the depth at berths is not increased in the short term, until available capacity at the digout port becomes available. Which has a direct spend loss impact of R1961m, induced spend of R1569m, port related employment loss of 852 jobs and total employment loss of 3530 over the period of NO DEVELOPMENT SCENARIO - LOSS DUE CHANGE IN VESSEL SIZE DURING OPERATIONAL PHASE ONLY Year TEU projections at Pier 2, Berths First round port cluster spend (Rm) Induced supporting services spend (Rm) Total (Rm) Port Cluster Employment ( no of jobs) Port Related Petroleum Industry Employment (no of jobs) Wider Economy Employment (no of jobs) Total Employment (no of jobs) 2016/17 78, /18 88, /19 95, /20 103, /21 111, , /22 120, , /23 129, , /24 140, , /25 151, , TOTAL LOSS (NO DEV) 1,019,460 5,465 4,372 9,838 1, ,408 4,339 27

28 3.5 Concluding Comments 1. The temporary benefits of the construction process have been shown to include: R3050m to R5494m in new business sales R1083m to R1952m in Gross Value Added R963m to R535m in income multipliers locally (KZN) to temporary work opportunities created through the port construction process. 2. The operational benefits of the expansion to year 2025 have been shown as follows: Using the projections of TEU volumes from TNPA from 2012/ /18 and a medium term growth rate of 8% (post-recession growth) from 2017/ /25, by 2025 TEU traffic projections on these berths reaches over 5 million TEU per annum. This relates to spend of R27 088m first round and a further spend of R induced into supporting services. Employment related to this traffic base is persons. 3. The losses in benefits if the berths were only deepened but not lengthened by 170m were shown to include: a loss of direct spend of R16 653m, induced spend of R21 671m and port related employment loss of jobs and total employment loss of jobs over the four years of construction. a loss of direct spend of R1 523m, induced spend of R2119m and port related employment loss of 507 jobs and total employment loss of 1225 jobs over the operational seven years. If the capacity for the Dig-Out Port comes on line, in accordance with the anticipated planning horizon, by 2021 then this loss is reduced to: a loss in direct spend of R554m, a loss in induced spend of R443m and port related employment loss of 185 jobs and total employment loss of 446 jobs over the operational three year period between the end of construction and the availability of initial capacity at the dig-out port. 4. The losses in benefits if the expansion does not occur at all were shown to include: No loss of trade for the first 5 years, absolute loss of all CAPEX investment benefit. This equates to a loss of handling capacity of TEUS carried on vessels too large to be berthed if the depth at berths is not increased in the short term, until available capacity at the dig-out port becomes available. Which has a direct spend loss impact of R1961m, induced spend of R1569m, port related employment loss of 852 jobs and total employment loss of 3530 over the period of

29 Section 4: Scoped Socio-Economic Impacts The impact on subsistence fishing, beach tourism, and traffic were flagged as part of the scoping report and raised during public meetings by interested and affected parties. Each of these is discussed in the following sections. 4.1 Subsistence Fishing (Includes Commercial and Recreational) An organisation called the KZN Subsistence Fisherman Forum has raised concern that the DCT expansion is going to impact on their livelihoods. Eleven fishermen from the forum came forward, however, it is uncertain how many subsistence fishermen are utilising the port; as Ezemvelo Wildlife stated that there are no registered subsistence fishermen formally recorded on their register for the ethekwini area. The closest registered and recognised subsistence fisher groups are located in Umgababa (south coast) and Nonoti (north coast). Furthermore, officially, there is no port access allowed to fishermen by the TNPA. Regardless, it seems that subsistence fishing is occurring within the port and along the coast north and south of the port and there is a possibility that this may be impacted by the expansion and deepening of berths There is also a possibility that the impact on the Durban port estuary habitat will affect fish populations along the east coast which might also affect commercial and recreational fishers An overview of subsistence fishing in KZN and Durban Bay True subsistence fishing is not a chosen activity but one carried out to obtain the basics for survival when there are no alternatives. It can produce extra resources, which occasionally may be sold or bartered, but the basic aim is not to sell the resources. The following description of subsistence fishing is provided by Ezemvelo KZN Wildlife s Craig Mulqueeny 18. Many communities in KZN have been formally identified, by Ezemvelo and MCM, as containing true subsistence fishers and most of these have been formalized with permits issued and the fishing monitored. No subsistence fishing licenses have been issued to fishermen within ethekwini s borders. According to Ezemvelo, in almost all cases identified so far, there has been a drastic decline over the last few years in the numbers of people carrying out subsistence fishing. This is usually ascribed to the advent of and improvement in social grants which now supply most of the poorest people in the province with much of their basic needs. In 2011 approximately 6% of all shore anglers in KZN could be considered true subsistence fishers (this translates to approximately people) 19. Most of the difficulties with subsistence fishing have arisen where there is a blending of true subsistence fishing and commercial interests. Where people really were trying to obtain their basic needs these have now mostly been made available through the grants. There are serious challenges due to the sale of resources collected under the umbrella of subsistence fishing as many of the resources may not legally be sold and the resources cannot sustain increased use levels. If any dispensation was to be made for these fishers then it could not be for subsistence fishing but for a commercial enterprise Dunlop SW (2011) An assessment of the shore-based and off-shore boat linefishers of KwaZulu-Natal, South Africa, Unpublished thesis of UKZN 20 Ezemvelo KZN Wildlife, Craig MulQueeny, Sancor Newsletter 29

30 4.1.2 Recreational and Commercial Fishing in KZN According to research conducted by ORI over 2010/2011 there are approximately shore fishers in KZN and this number has remained fairly constant over the previous 10 to 15 years. They all operate under recreational licenses. It is estimated that the total recreational shore catch per annum in KZN is 250 tons. At R40 per ton this equates to R10 million per annum (Dunlop 2011) 21. However, due the recreational nature of this fishing, it is not expected that all of this catch is sold (perhaps 50%). It should be noted that the value of recreational fishing due to tourism and retail spend is significant. CIC International estimate that 30% of commercial catch is estuary-dependent and that of this, 13% is attributable to the Durban Bay. This equates to R Many anglers fish on the Durban beachfront throughout the year. It is a renowned venue for recreational anglers from all the provinces of South Africa and overseas and good catches can still be made from the beaches and piers. Monitoring shows that the most common species caught, accounting for well over half the fish, is shad. Shad are a recreational list species which may not be sold in KZN. Many thousands of visitors come to KZN annually to fish along the shore and shad are the greatest drawcard. This industry is of immense importance to the economy of the province and each shad caught effectively brings in much more revenue than would be obtained from catching and selling the fish. Any marked reduction in shad abundance would undoubtedly impact negatively on tourism 22. There are 52 commercial line boat rights available in KZN but only approximately 42 commercial line boats currently operating on the KZN coast. It is estimated that 1487 metric tonnes of fish is caught per annum by commercial line boats. Of this 457 tonnes is recreational, 245 by charter boats, and 785 is for commercial fishing (Dunlop 2011). The value of the total catch is approximately R60 million, and the value of the commercial catch alone is R31,4 million. It should be noted that the value of recreational fishing due to tourism and retail spend is significant. CIC International estimate that 45% of commercial catch is estuary-dependent and that of this, 13% is attributable to the Durban Bay. This equates to R2 million Impact of the widening and extending of berths on fishers in KZN Based the above assessment we can conclude that there is little to no true subsistence fishing in the Durban area (albeit some in KZN) but that there is substantial commercial and recreational fishing occurring. The proposed expansion could impact the line-fish population and bait harvests in Durban Bay which would both have a negative impact on fishermen in the area and the economic value of tourism to Durban. Furthermore, according to the CIC International Environmental Resource Evaluation study all estuaries along the east coast form a metacommunitiy which relies on each other to absorb shocks and provide breeding areas for fish. Therefore, any impact on the Durban bay with impact proportionally (13%) on this East Coast metacommunity 23. For these reasons it is important to understand the impact that the widening and extending of berths will have on line fish. 21 Dunlop SW (2011) An assessment of the shore-based and off-shore boat linefishers of KwaZulu-Natal, South Africa, Unpublished thesis of UKZN 22 Ezemvelo KZN Wildlife, Craig MulQueeny, Sancor Newsletter 23 CIC International (2007) Environmental Resource Economic Evaluation for Durban Bay 30

31 According to the Estuarine Biodiversity Study conducted for this EIA, the central sand bank which will be affected by the proposed project is particularly prevalent with high densities of sand prawn Callianasa kraussi, higher than for most of the other sand banks in the Port (Newman et al. 2008). These crustaceans are a very important food source for fish. Any destruction of the sandbank will have a proportional impact on the fish in the estuary and therefore on the catch in the estuary and along the coast. Furthermore, disturbance and/or displacement of linefish as a result of the dredging operations is also considered likely. These effects may be reduced only by strict adherence to a suite of proposed mitigation measures that include refilling/backfilling and enlarging of the Centre Bank sand flat in addition to strict operating rules pertaining to dredging such that the extent of any turbidity plumes are minimised and do not exceed specified threshold levels 24. Post construction, if mitigation measures are adopted in full and recreation of the habitat lost is successful (specifically the offset created needs to fulfil the same function as the sand bank lost and sand prawn in particular need to migrate effectively) then the resulting impact on line-fish will be positive 25. However, during construction, the disturbance created by dredging and other construction will cause 50% of the linefish to be displaced within the extent of the dredge plume. The impact on fishers within the bay will be medium to high during this time; however, the impact outside of the plume extent is seen to be zero (Anchor Environmental) Beach Tourism Interested and affected parties noted concern that there will be an impact on water quality and wave size (turbidity and bed shear stress levels) which would affect prime beach areas at Ushaka and Bluff. These beaches are used for various tourism activities and act as the major draw-card for domestic tourism especially in Durban. Durban s tourism industry provides an income for thousands of people and contributes 4.8% to the city s GVA. Any negative impact on the beaches would cause a large knock-on effect in the economy of the city. The following sub-section discusses the value of the beaches in Durban, to Durban s economy. EThekwini s share of the national total tourism spend has increased from 5.7% in 2006 to 8.5% in Total tourism spend in 2011 for ethekwini was R14,647 million, this is up by 323 million from 2010 (current prices). In 2011, tourism contributed 4.8% to ethekwini s GDP. This has declined by 0.5% since The total number of trips in ethekwini in 2011 was 2,751,342 trips. The number of trips has decreased by 2.2% on average annually for the previous 5 years. The most severe decrease in trips was in 2011 (-7.7%). The following graph shows that 69% of trips in 2011 in ethekwini were visiting friends and relatives, leisure trips were 16%, while the contribution of business trips was 9%. The only purpose that has shown growth over the previous 5 years has been leisure trips (1.5%). 24 Estuarine biodiversity specialist study for an eia for deepening, lengthening and widening of berth 203 to 205, pier 2, container terminal, in the port of Durban by Anchor Environmental 25 Estuarine biodiversity specialist study for an eia for deepening, lengthening and widening of berth 203 to 205, pier 2, container terminal, in the port of Durban by CSIR 31

32 Other (Medical, Religious, etc) 6% Leisure / Holiday 16% Business 9% Visits to friends and relatives 69% FIGURE 10: SPLIT OF PURPOSE OF VISIT TO ETHEKWINI, 2011 Source: Global Insight Regional Dataset, ethekwini Economic Review 2010/2011 (2012) While the number of domestic trips to ethekwini has decreased over the previous 5 years, the number of bednights has increased by 2.4% on average annually, which means that while domestic tourists are making fewer trips, they are staying for longer when they do come. The number of bednights did also decline in 2011, however (by 1%). The number of bednights spent in ethekwini in 2011 by domestic tourists was 14,633,403 and the number spent by international tourists was 2,635,884. This is an 85% to 15% split. The figure below describes what the public feels are the greatest draw cards to Durban with regard to tourism. Over 60% of all respondents said that the beachfront was the major factor drawing people to Durban this provides an indication of the value of the beach to Durban tourism. FIGURE 11: THE IMPORTANCE OF THE BEACH IN DRAWING PEOPLE TO DURBAN Source: Survey conducted as part of the ushaka Marine World Impact Assessment,