Road Freight Association CEO Gavin Kelly
Representative organisation the Road Freight Association (RFA) emphasises that the deterioration of South Africa’s ports and rail has been a slow, continued process over at least ten years, and that management of State-owned entity (SOE) Transnet and its subsidiaries have been fully aware of the challenges, and continuously informed of these, by both structures within their respective organisations and the private sector.
“Nothing was done to counter this – neither to reverse, nor hold the decline. The executives, management and Ministers who have ‘led’ public enterprises (State assets and the management thereof) and the various subsidiaries of Transnet, are the ones to blame,” RFA CEO Gavin Kelly posits.
He informs that the RFA, as a representative organisation, is involved in the Road Transport and Security Workstreams of the National Logistics Crisis Committee (NLCC).
The RFA is involved in the discussions relating to the challenges facing logistics in general, but specifically in those discussions which affect road freight (ports, rail, intermodal and cargo specific operations of Transnet and its affiliated sub-divisions).
“The NLCC seeks to reverse decay, corruption and collapse. This will be a lengthy process and there is very little trust or faith left in those who allowed the collapse under their watch, to now suddenly become the ‘saviours’,” Kelly states.
In his opinion, transport, logistics, market-related activities, running efficient and reliable supply chains and ensuring good competition to ensure growth and sustainability are the “purview” of private business.
In this vein, he has called for the private sector to be given much more control over struggling SOEs.
Kelly questions why “short-term” plans were not implemented many years ago and are only being pursued now that various SOEs are under pressure.
“A long road lies ahead of South Africa in terms of bringing ports and rail infrastructure back to a position of efficiency. We need the private sector to drive and control the nursing back to life of our vital supply chain infrastructure and nodal points,” he says.
In a separate statement, South African Association of Freight Forwarders (SAAFF) CEO Dr Juanita Maree warns that, without a functioning logistics network, 60% of South Africa’s economy is at risk, as trade in goods represents the major portion of its national economy and demands the uninterrupted movement of goods.
“Over the past two weeks, leaders from across the logistics, supply chain and transport sectors have supplied exhaustive detail of the situation to business and the nation, generating wide media coverage.
“The message from industry highlighted the issues, while at the same time underscoring solutions which are, by and large matters covered in the logistics roadmap to recovery and the work of the NLCC. This is all work in progress, thanks to the collective focus. But it is no secret that to fix the fundamental issues requires time and significant resources.
“To be sustainable, the approach requires a complete overhaul of the strategy and operational approach to the management of port and rail infrastructure – these are matters at the top of the agenda at parliamentary, institutional, national, and regional levels,” Maree says.
She says the reality is that the issue is now with the country, and reiterates warnings that it will impact indiscriminately all sectors of the economy, as well as the people of South Africa, other African countries, regional economies and international partners.
“This conversation must continue but it must be accompanied by immediate action.
“Over the last decade, our terminal efficiency has declined by 28% compared to our internal targets. Benchmarked against globally recognised best practices for ports of a similar size, current throughput at 84% of demonstrated capacity is 50% below norm,” Maree says.
“While the knock-on impact of the situation cannot be underestimated, I am greatly encouraged by the stage we have reached; the open conversation has widened the collaboration; great courage and determination has been apparent across all the platforms,” she highlights.
Maree emphasises that, beyond the crises of today, fundamental changes for the country to be pivotal in intra-Africa trade and a key player across global markets.
“The fix demands much more than bricks, mortar and machinery, it also calls for a revolutionary approach and that is the need to rebuild logistics on new foundations.
“Intra-port competition is a practice we need to embrace. This approach will bring about important, new dimensions; introducing greater efficiencies through the dynamics of increased competition and structured collaboration between all the national ports – Durban, Cape Town, Ngqura, Gqeberha, Richards Bay – while enabling the opportunity to benchmark performance among our ports, on-the-fly and in line with new world standards,” she avers.
PORT OF DURBAN
Exporter and importer Hume International operations and logistics director Roy Thomas, meanwhile, has stressed that ongoing delays at the largest port in the country, the Port of Durban, is plunging the South African logistics system in disarray, and could lead to increased prices in consumer goods, and, in a worst-case scenario, a shortage of certain products over the Christmas holidays.
It could also affect product availability over the January back-to-work and back-to-school period.
“We have heard forecasts that it could take up to three months to clear vessels that are currently anchored at the Port of Durban.
“This spells bad news for consumers during the upcoming festive period, especially given heightened demand over the period, as well as the fact that most families are looking to stretch limited budgets even further this year. Unfortunately, consumers should brace for a rocky few months ahead,” warns Thomas.
Compounding this is that several freight carriers are now levying additional charges against importers owing to the delays.
While these fees have not yet been levied against frozen and refrigerated cargo, the added fees are impacting on products in the dry ingredient product category such as powdered eggs, the company says.
“Unfortunately, importers simply do not have the ability to absorb this increase in costs, and have no choice but to adjust prices accordingly. This in turn has a knock-on impact throughout the supply chain and, ultimately, consumers will be left holding the bag,” Thomas posits.
Inbound vessels are being diverted to other ports to alleviate the situation, but Thomas believes these ports may also lack the necessary capacity to efficiently deal with the strain of a rapid increase in freight traffic.
“In line with our strategy to allocate some of our freight away from Durban, we have been engaging with our supplier base to develop a plan that will allow us to continue to ship products to South Africa to keep the supply chain moving. For example, Hume International is currently looking at diverting cargo from Durban to Port Elizabeth and Cape Town.
“However, this is not a silver bullet, and the costs for these changes are substantial for cargo that is already en route or waiting to enter the Port of Durban,” he explains.
Exporters such as the citrus industry have the option of sending freight by road to the Port of Maputo, in Mozambique, for further transportation. However, this option is closed to importers, as regulations set out by the Department of Agriculture, Land Reform and Rural Development do not allow for the importation of containers into South Africa through Mozambique or Namibia.