Freight rail and ports crisis in the spotlight

October 24, 2023

Urgency and hope were the key messages delivered in an important update on the National Logistics Crisis Committee’s (NLCC’s) work at the recent SAPICS Spring Conference in Johannesburg. A panel discussion addressed the status of the NLCC’s critical plans to drive economic growth by improving the performance of industry supply chains, including South Africa’s freight rail and ports.

Addressing the supply chain professionals who attended the event hosted by The Professional Body for Supply Chain Management (SAPICS), Rudi Dicks, head of the Presidency’s Project Management Office, stressed that the current situation is dire and urgent change is imperative. “If we don’t see fundamental changes in rail and ports, we are dead in the water. South Africa cannot compete globally – our products will not get to market. There are no alternatives to ports; we cannot build new ones. Trade will go to our neighbours,” he stated.

Echoing Dicks’ sense of urgency, panellist Mxolisi Mgojo, former CEO of Exxaro Resources and a key role player on the NLCC, noted that R50 billion was lost in commodity exports due to poor rail performance in 2022. He said that mining companies are reconfiguring in line with the current reality and delaying capital investment, which is putting jobs at risk.

The NLCC has three key objectives. The first of these is to improve the operational performance of industry supply chains, including freight rail and ports. The committee is also implementing reforms to modernise the freight transport system and restore its efficiency and competitiveness. Its final objective is to create enabling conditions for the freight transport system to operate effectively, including legislative changes and exemptions where necessary to facilitate efficient procurement processes and adequate funding of the network. With more than 130 South African CEOs and leading businesses supporting the NLCC and committed to working with government to achieve these objectives, SAPICS Spring Conference presenters Dicks, Mgojo, and Ian Bird offered attendees glimmers of hope as they shared their insights on the committee’s progress to date.

Bird, who is the senior executive responsible for the Transport and Logistics focal area at Business for South Africa (B4SA), said that the NLCC has the attention of President Cyril Ramaphosa. “Progress has been slightly slower than we hoped, but we meet directly with the President every six weeks to provide an update,” he informed SAPICS Spring Conference delegates. Non-executive Transnet directors have also been assigned to each of the NLCC’s corridor projects.

Bird said that two NLCC workstreams formed in August have already achieved milestones. “The Minerals Council of South Africa Corridor Optimisation Teams have transitioned into NLCC Corridor Recovery Teams (CRT), which are working on five key corridors. Terms of reference and key performance indicators (KPIs) are being finalised per corridor, including the identification of project teams,” he revealed. “A central coordination centre and self-regulation tool concept paper has been drafted, engagement sessions have been held with potential data partners to establish the central coordination centre, and a multi-disciplinary team has been formed to address congestion challenges at the Lebombo border crossing and N4,” Bird revealed.
He also explained that the Border Management Authority (BMA) and SARS were rolling out an efficiency improvement pilot programme, with mobile units for customs clearance and immigration, adding that the teams’ short term focus was on the N4, followed by the N3, N12, and N2.

Above: Rudi Dicks, head of the Presidency’s Project Management Office, believes that if we don’t see fundamental changes in rail and ports, the country is “dead in the water”.

Numerous successful arrests were a positive development on the NLCC’s security workstream, which aims to secure railway, port, and pipeline infrastructure. It has also established a link between the NLCC and the Joint Initiative on Crime and Corruption (JICC). Currently, this team is assisting industry in collecting incidents to conduct crime pattern analysis and crime threat analysis, Bird said. “They are also conducting resource assessments of existing security measures and resources within industry, providing aerial surveillance capability, and establishing an escalation mechanism to report incidents for quick resolution.” Bird reported that significant work was being done by the SA Police Service to secure the North Corridor line from Thabazimbi to Richards Bay, including the Export Coal Line to the latter, and that the aim is a crime-free corridor.

Dicks noted that progress had been made in unblocking inefficiencies in Transnet’s procurement and financing. “We are working with the National Treasury and Transnet to ensure the procurement process is more agile and adaptive, and that there are no delays in procuring urgent spares and equipment,” he said. “State Owned Corporations, including Transnet, are engaging with National Treasury regarding required exemptions to improve operational efficiencies and on procurement matters relating to private sector participation transactions.” He cited the example of a shortage of batteries to start locomotives. The procurement issue of taking three months to get them shipped to South Africa was a priority that would be resolved, he said, along with other “nuts and bolts” problems topping the NLCC’s agenda.

“We need to communicate hope and we will make a difference very shortly,” Bird concluded.

This year’s SAPICS Spring Conference was held in collaboration with the South African Association of Freight Forwarders (SAAFF).