What the logistics crisis has done to trucks

Transport costs and volumes provide very reliable barometers of industrial performance and the state of the economy. So, it is clear that the South African logistics sector is facing enormous challenges. NICK PORÉE reveals that the consequences of this situation are dire – and the number of registered heavy goods vehicles has plummeted.

South Africa’s real GDP growth was 0,2% in 2019, according to the African Development Bank, which reports: “The pandemic and the containment measures to curb the spread of the virus further damaged the economy. Real GDP contracted by 8,2% in 2020, the result of a decline in construction, transport, and communication.”

The effects of this situation include disinvestment and deindustrialisation – with the result that, for the first time in 100 years, the number of registered heavy goods vehicles has dropped by 33 500 from 2010 to 2021. Transnet’s half-year result for 2021 showed a 17,3% decrease in earnings. The impacts of reduced employment and resulting poverty spilled over into destruction and carnage in several areas of the country recently, with attacks on industries and transport, particularly in KwaZulu-Natal.

Against this backdrop of declining industrial outputs and reduced imports due to the depressed economy, the transport sector is suffering from the effects of statist state-owned enterprises (SOE), governmental inertia and distorted decision-making at various levels. The mismanagement and operational failures of the railways have resulted in South Africa losing about nine million tonnes of coal exports in the first half of 2021. Furthermore, cable theft, accidents and equipment deficiencies are reducing efficiency and aggravating road congestion.

Delays estimated at R2 billion a year

The port of Durban has – as predicted in several studies – reached capacity due to a lack of forward planning and investment, and uncoordinated silo planning by the authorities involved. The current cost of delays to shipping and road haulage is estimated to be R2 billion a year, excluding the impacts of industrial costs, which could be double that figure, and ships are increasingly bypassing Durban to maintain their schedules. The World Bank Report rated South Africa’s ports as almost the worst in the world for efficiency and costs.

The political decision to build the port of Ngqura deflected critically needed funding from the expansion of Durban and Richards Bay, with the result that South Africa’s main import-export corridors are now unable to compete with the rapid developments taking place in neighbouring countries.

Meanwhile, cargo volumes at Dar es Salaam have increased by 40% in the last six months and Walvis Bay is now receiving 105 000 tonnes of copper by road. New port, rail and road developments at Walvis Bay Lobito, Maputo and Nacala will terminate South Africa’s claim to be “gateway to Africa” and will probably scupper South Africa’s African Continental Free Trade Area (AfCFTA) regional trade with competition from growing imports via regional ports.

The situation is aggravated by the delays on the regional borders, where the week’s average cross-border transit times have hovered around about 16,3 hours. As predicted, border delays have increased significantly, especially along the North-South corridor. The total delay cost for a week amounts to about R443 million (R23 billion per year), with only tepid and minimal apparent interest by government in resolving the problems.

The Department of Public Works gazetted the National Infrastructure Plan for public comment by September 17, 2021. The plan provides a high-level, academically phrased collection of SOE wishes for the future, but provides minimal information on amounts to be spent, or any economic justification for the broadly described investments. It includes the information that the private sector is expected to participate but assumes continued statist management and definition of projects, terms and conditions.

Measures to resolve the critical need for transport and logistics investment do not appear to be appreciated or intended, but for the unctuous academic comment that “it is estimated that ‘waste’ alone (such as inefficiency in ports and intermodal connections) creates a 10,5% elevation in the cost of trade logistics”….

The gazette notes that the freight transport system has served traditional industries relatively well. “However, it has not sufficiently improved service to non-traditional industries and agriculture (the sectors meant to drive future growth, dynamism and employment creation). The rigidity of the freight transport system is partly explained by an institutional context of state monopoly provision, very limited private participation, and weak regulation,” it states.

Sometimes I wonder if government has ever heard of the private sector road freight industry, which transports an estimated 1,5 billion tonnes of cargo per year.

Freight logistics sector in crisis

It is clear that the freight logistics sector in all modes is in crisis due mainly to statist neglect, and policies that have promoted incompetence, collapsed the economy, and blocked expansion, by creating unsustainable levels of debt and unemployment. As stated by our new Minister of Finance, “the only logical solution is wealth creation”, which is necessarily a private sector competence and can only be implemented within a radically transformed economic dispensation free of misguided official interventions in economic activities.

Future economic recovery requires a total-government commitment to a holistic plan using private sector logistics expertise to address the very extensive multi-disciplinary recovery effort to revitalise ports, rail, road,and borders.

Specifically, eThekwini and KwaZulu-Natal need strategic planning for industrial investment, growth and employment to obviate a recurrence of the recent chaotic insurrection. The planning must include the development of industrial areas and strategies to attract investment, a new access route to the port, improved inner-city road access, port expansion and the relocation of facilities, and increased peripheral logistics space. All these are required to promote the city’s maritime advantage and must be supported by effective road and rail systems to the interior.

The creation of a holistic and integrated 30-year vision requires urgent high-level coordination of the various stakeholders into a single plan, which will add meaning and purpose to Operation Vulindlela. Only then can we start steering our way out of this crisis.