Freight logistics in crisis

The establishment of a freight logistics association is essential to the survival of the freight logistics sector in South Africa. NICK PORÉE believes that there are numerous reasons why such an association is vital …

The freight logistics sector of the South African and sub-Saharan African economies is continually hampered by problems caused by the actions of the authorities in various disciplines within the region’s governments. In cross-border logistics, the failure to achieve efficient inter-governmental working relationships causes massive delays – such as those experienced at Beitbridge and Lebombo, with 20 km queues of trucks, costing millions of rands per week. A freight logistics expert (Mike Fitzmaurice from the Federation of East and Southern African Road Transport Associations – known as Fesarta) recently visited the Beitbridge border post and, two days later, there were no more queues, but Lebombo, he reported, was still gridlocked.

The recommendations in the recent report for the United Nations Economic Commission for Africa (UNECA) include the need for effective corridor authorities, which can coordinate the efficient introduction of seamless systems and the measures to facilitate interstate trade that are the norm in developed regions. These will be critical for the African Continental Free Trade Area (AfCFTA) to succeed in competition with sophisticated and efficient international suppliers. The improved systems will require freight logistics experts to make them work.

The failure to create an efficient regulatory system for commercial freight transport when it was deregulated in the 1980s now conflates transport regulation with road traffic. The failure to regulate commercial transport results in uncontrolled sub-standard operations, incompetent operators, defective vehicles, ill-trained drivers, and no responsible persons. The system does not even have records of who is operating on the roads.

The Factories Act requires certificated engineers to operate plants with more than 3 000 kW of power, whereas road freight operators can operate 10 000 kW of powered machines on the public roads with no knowledge at all. The failure by government to implement effective commercial freight transport regulation has led to divergent systems and standards at provincial and central government levels. These are being ignored and exploited for gain. A freight logistics association would research the problems, define the necessary action, locate the experts, and fix the problems.

The National Traffic Information (eNatis) system was supposed to provide a regulatory function but only serves to manage vehicle and driver licensing fees with no analysis or reporting on operator compliance. The Certificate of Roadworthiness system is ineffective and riddled with corruption and our Professional Driver Permit system is a complete misnomer, as it does not include anything like professionalism. South Africa has a road safety record of 26 fatalities per 100 000 compared with four to five in the developed world. This is due to deficiencies in training, licensing and enforcement, instead of which there is a proposed complex and very expensive Administrative Adjudication of Road Traffic Offences (AARTO) system of penalties.

South Africa has historically been the regional source of traffic legislation, so we have exported our deficiencies to the region, and the current Southern African Development Community (SADC) Tripartite Transport and Transit Facilitation Programme is attempting to extend it even further to cover freight transport in the tripartite region of 27 countries. There is a need for freight logistics expertise to redefine the problems and implement the system with the industry, or it will not work.

The planning and development of our ports has suffered from political priorities instead of commercial realities, with the result that we are now rated worst in the world, and the costs of the delays and inefficiencies are rapidly losing us our status as the gateway to the region. Competition from neighbouring ports is being fuelled by port and corridor investments on the east and west coasts aimed at improving logistics capacities to the landlocked interior countries. The concept of Transnet corporate port planning in isolation from the maritime logistics industry is a recipe for continued inefficiency, as it ignores the fact that port efficiency is only one element in a complex supply chain system that cannot be managed by any one entity. Freight logistics knowledge, expertise and experience are required to align the port systems with commercial supply chain practices.

The South African railway logistics system is breaking down: cable theft, derailments, accidents and equipment failures are having a negative impact on customer service, export competitiveness and in some cases, business survival. The intentions to liberalise the use of the rail track network to encourage competitive train operations are evidently just posturing by government,  as current actions all point to the intention of Transnet SOC, to retain monopoly control of the ports and railways, which will deter any serious private sector investment. There is a need for a blueprint of a future intermodal logistics framework that will attract investment and competitive operators in all modes to support industrial growth and employment. A freight logistics association would analyse the needs and provide the expertise to create a workable system for the future.

At governmental level – for example, the National Economic Development and Labour Council (NEDLAC) – it appears that commercial freight transport and logistics is not seen to be a separate sector but combined into the “ocean economy”, whatever that may mean. Statistics SA produces “national transport statistics” based on a monthly survey of 711 companies excluding own-account operators. The Department of Public Works’ National Infrastructure Plan conveys the underlying perspective that freight logistics planning will somehow be controlled by state-owned enterprises, although those entities are the least involved in the industry. There is a need for freight logistics expertise to add the practicalities of the very extensive private sector operations to the governmental deliberations and decisions.

At Department of Trade, Industry and Competition level, the many masterplans that have been churned out for industrial sectors appear to have a minimal appreciation of the key role of logistics in the location and success or failure of industries. This is aggravated by the fallacious concept of “localisation”, which implies that international supply chains will somehow be restricted to suit the myopic vision of “buy local”. For industrial investment and growth, it is essential that South African industries can use the best possible international technology and equipment. There is already a serious problem with ineffective and very expensive logistical and cost barriers to the efficient supply of equipment and spares for existing machines. This is aggravated by a lack of trained technicians to repair modern equipment. These limitations have negative impacts on business efficiency and survival. Many of the problems are supply-chain logistics limitations exacerbated by government controls. There is a need for a freight logistics association to log the problems, analyse the options and make concrete recommendations to the right government agencies.

All this suggests that there is a need for an effective association of logistics industry stakeholders to address these serious barriers to national economic revival. This is urgent after the devastating effects of the recession, Covid and the continued governmental indifference to the impacts of limited industrial expertise in various state departments and agencies that affect transport and freight logistics.

What are your views on the need and potential for a freight logistics association to address the challenges facing the industry? Is it necessary? Could it make a contribution? Email your comments to: Nick@npagroup.co.za or charleen@focusontransport.co.za.