Road Freight Association CEO Gavin Kelly
The cost of logistics in South Africa has increased significantly in the last eight years to about R800-billion a year at present, accounting for half of all products’ inherent costs.
This while the country’s logistics ability is declining.
Boutique consultancy GAIN Group director and Stellenbosch University's Professor Jan Havenga says the transport sector emits about 50-million tonnes of carbon dioxide a year, which could be reduced by at least 7.8-million tonnes if more cargo can be moved from road to rail.
He estimates that 6% of South Africa’s economic growth was wiped out owing to Transnet in 2022, with an overall R1-billion loss recorded every day owing to rail inefficiencies and R200-million owing to port inefficiencies.
Havenga says the rail network needs to be five times its current size to cater optimally for demand.
To illustrate where South Africa should be, Havenga explains that South Africa’s land mass is about equal to Germany and France combined, yet its gross domestic product is 18 times smaller.
“We are in the process of shedding 500 000 job opportunities, which is double the jobs and five times the income loss experienced during the whole Covid-19 lockdown period,” Havenga points out.
While the private sector has done well to advance logistical efficiencies in the country, government ultimately needs to play a greater role in supporting value chains, including through upgraded railway lines, integrated planning – including integration of modalities, resolving terminal issues and planning for shorter transport distances.
Notably, Havenga says, Transnet has been making progress on its turnaround plan, with a new board having been appointed in July and an effective acting management team having been put in place. He says the prior management of Transnet did more damage to the organisation than State capture did.
He hopes that solid efforts will follow after Cabinet approves the Freight Logistics Roadmap, which was developed by government and Transnet.
Havenga warns that Transnet needs to ensure it roots out all culprits of mismanagement, including mid-level leadership, and instil cultural changes within the organisation.
Another looming risk is new Ministerial appointments following the elections next year, however, for now there is willingness on government’s part to participate and do sensible planning, he adds.
As a solution of some of the logistical issues, Havenga proposes the development of a “super terminal” in the Western Cape, which could serve as a freight village and backup port for all other ports in the country, incorporating various terminals for fruit, containers, dry bulk, processed foods and fuel.
“One big virtual terminal could shorten points of beneficiation in the supply chain and eventually allow for the calculation of flows of trucks, cars, trains and planes. This can only be done if government takes some lead and if logistics service providers and terminal operators work together.”
Road Freight Association CEO Gavin Kelly proposes that South Africa needs more modality integration, since most transport modes have developed independently and actually compete with each other in their own silos of operation.
“All modes of transport see the other modes as competitors, often owing to different regulatory regimes and competitive rules. In these silos, there is a belief that each mode controls cost and frequency of service,” he explains.
Kelly suggests a logistically linked system using two or more transport modes with a single rate, including more capacity for ports to accommodate multi-modal integration, could greatly benefit the economy.
Up to now, factors such as cost, reliability and regularity and cargo risk have influenced choices on modes of transport, which differ vastly across the main modes of transport – rail, air, maritime and road.
“South Africa has the need for one mode to efficiently interact, receive and transfer cargo from another mode, which, if achieved, influence what modes are chosen in future,” Kelly notes.
Intermodal transport will only work when all modes work together towards the goal of seamless supply chains. “Rather, key pieces of the supply chain are currently sinking in a quagmire of mismanagement and crisis.”
The only solution, Kelly proposes, is to allow the private sector to take more control of the supply chain.
For South African Association of Freight Forwarders CEO Dr Juanita Maree, a key issue lies with the sector not communicating one message and one truth, which leads to it not working as a cohesive body and heading in different directions.
She says greater collaboration on logistics networks will create excellence and reform, which will require doing away with the old way of doing things.
The experts spoke during a Transport Forum discussion hosted on December 5.