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NLCC’s work to continue, freight sector poised to transform in next two years

Mxolisi Mgojo

Irvin Naidoo

10th June 2024

By: Irma Venter

Creamer Media Senior Deputy Editor

     

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Business Unity South Africa president Mxolisi Mgojo says he is confident that work within the National Logistics Crisis Committee (NLCC) will continue as political parties grapple to form a coalition government post the national elections held at the end of May.

“We partner with the government of the day,” says Mgojo.

This sentiment was echoed by NLCC strategic adviser Irvin Naidoo, who told Engineering News Online that the committee’s work to improve South Africa’s logistics systems will continue, “until it is told otherwise”.

Naidoo and Mgojo spoke at the yearly Sapics conference, held in Cape Town this week.

Sapics is the professional body for supply chain managers in South Africa.

The NLCC was formed in 2023 to tackle South Africa’s ailing logistics system – rail, roads and ports – as a partnership between government, organised labour and business.

While ultimately seeking structural reform to improve the domestic logistics system’s global competitiveness, as guided by the Freight Logistics Roadmap – approved by Cabinet at the end of last year – the immediate goal has been to arrest the decline.

Naidoo said on Monday that South Africa’s logistics space was poised to transform “quite significantly over the next 12 to 24 months” as the competitive environment became stronger, more investment was crowded into the freight system, and more partnerships developed between the State and the private sector.

A key step currently underway was the establishment of a National Ports Authority as an independent subsidiary of parastatal Transnet, allowing it to better fulfill its functions of licensing port terminals, providing oversight, as well as facilitating investment into the port system, noted Naidoo.

Another step was the establishment of a separate infrastructure manager for rail.

One of the key aspects of the broader reform process was separating rail infrastructure from rail operations as part of the objective to improve the competitive environment, noted Naidoo.

That process was well advanced, as manifested in Transnet’s network statement, released in March.

“The network statement basically established the rules and mechanisms on how private operators would access the rail network,” said Naidoo.

Public comments on the statement were now closed, with these comments to be consolidated and recommendations to be made to the relevant ministries.

An updated statement was anticipated by August, with applications for access to the available lines to open in September.

“We anticipate that the infrastructure manager will be established as a full division in Transnet by April, 2025,” said Naidoo.

He added that the expectation was for third-party access to the network to start early next year.

In parallel to this, there was also a process to right-size the rail network, as it was found to be too big to be commercially viable.

Shrinking it would enable concentrating the available funds into “the right parts of the network”.

Naidoo said this right-sizing programme would afford interested parties the opportunity to indicate their interest in taking over surplus lines prior to their closure.

As for the proposed private sector investment programme in South African ports, Naidoo believed the current court challenge from one of the unsuccessful bidders for the Durban Container Terminal should “give us a lot of lessons, so that we can start to accelerate more transactions within this portfolio”.

He also noted that the Economic Regulation of Transport Bill had concluded all the necessary consultative processes, and that it was awaiting presidential signature.

What this Act would ultimately enable was to establish a single economic regulator for transport.

“One of the things that that allows us to do is to…. apply a regulatory lens along the supply chain, rather than just a single mode of transport, as is currently the case,” said Naidoo.

On the to-do list was developing an appropriate and sustainable subsidy framework for the domestic logistics network, to ensure it was funded in an “optimal way”, he added.

 

 

Edited by Creamer Media Reporter

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