From port to profit: logistics vital to SA’s growth

South Africa’s logistics network is more than a trade enabler – it is a cornerstone of economic performance. Improving efficiency could lower costs, attract investment, and boost GDP. DEVLYN NAIDOO explores the sector’s challenges, reforms, and opportunities.

In today’s global economy, logistics is no longer a back-office function – it is a critical driver of competitiveness, trade facilitation, and economic growth. In South Africa, a country heavily reliant on exports of raw materials and the importation of consumer and industrial goods, the performance of the logistics sector is inextricably tied to national GDP. As a result, improving logistics efficiency is not just a business imperative, but an economic necessity.

This article explores the current state of South Africa’s logistics network, its constraints, and the broader implications for GDP performance, while also examining key recommendations and offering a forward-looking outlook. A general observation suggests that an increase in container volumes correlates closely with improvements in GDP performance.

Zooming in on the logistics-GDP nexus reveals a clear relationship: a well-functioning logistics network reduces the cost of doing business, increases trade volumes, and enhances economic productivity. According to the World Bank’s Logistics Performance Index, countries with higher logistics efficiency typically demonstrate higher GDP per capita and stronger trade-to-GDP ratios.

In South Africa, the logistics sector accounts for approximately 10 to 12% of GDP, with road freight dominating inland movement. Ports act as critical intermodal nodes for international trade and as conduits for intra-African trade, via commercial maritime ports, airports, and land border posts of entry, designated under sections 6(1)(f), (g), and (h) of the Customs and Excise Act 91 of 1964.

South Africa’s sui generis (unique) geographic positioning as a gateway to sub-Saharan Africa – combined with a diversified economy and mineral wealth – should provide a natural advantage for logistics-led growth. However, systemic inefficiencies have undermined this potential and eroded competitiveness over time.

Encouragingly, several ongoing initiatives could reshape the logistics landscape. The Freight Logistics Roadmap, released by the Department of Transport (DoT), outlines reforms aimed at improving coordination, investing in infrastructure, and encouraging modal shifts. If implemented effectively, this could significantly enhance national logistics performance and drive GDP growth.

Transnet’s Recovery Plan, which includes a shift towards enabling third-party rail operators and improved port governance, reflects a growing recognition of the need for market-friendly reform. The recent request for information (RFI) and subsequent request for proposals (RFP) represent bold steps towards restructuring, reforming, and catalysing public–private partnerships (PSPs) to establish a capable and implementable logistics model.

The African Continental Free Trade Area (AfCFTA) presents a unique opportunity for South African exporters to access a broader African market. However, without efficient logistics and trade facilitation, this potential will remain largely untapped.

Recent trade data from SARS and the South African Reserve Bank indicates a moderate recovery in merchandise exports following pandemic-era disruptions. Nonetheless, fluctuating performance across the agriculture, automotive, and mineral sectors remains heavily dependent on the reliability of logistics infrastructure. Improved performance in this sector could enhance export competitiveness and provide a buffer against external economic shocks.

Transnet’s commitment to increasing private-sector participation – through concessioning parts of the Durban Container Terminal and upgrading port equipment – is a step in the right direction. These concessions should include performance benchmarks, enforceable service-level agreements, and investment obligations. Additionally, automation and digitisation – including single-window platforms and electronic cargo tracking – can greatly enhance operational efficiency.

Restoring the rail network is vital. This will require not only capital investment but also regulatory reform to enable third-party access to Transnet’s infrastructure. A liberalised, competitive rail sector could help shift cargo back from road to rail, reducing transportation costs and improving environmental outcomes.

A major overhaul of border and port clearance processes is also essential. Adopting a coordinated border management model, with harmonised inspection protocols and inter-agency information sharing, could significantly cut clearance times. The SARS Customs Modernisation Programme must be accelerated, while agencies such as the National Regulator for Compulsory Specifications (NRCS) and the Department of Agriculture, Land Reform and Rural Development (DALRRD) need clearer mandates to prevent duplication of functions. 

Implementing a national trade facilitation strategy in line with the World Trade Organization (WTO) Trade Facilitation Agreement is crucial. Establishing a National Logistics Observatory to provide real-time insights into freight movement, costs, and system bottlenecks would enable better policy decisions and infrastructure planning. This data should be publicly available to promote transparency and stakeholder accountability.

South Africa’s economic recovery and long-term growth trajectory are closely linked to the performance of its logistics network. Efficient logistics systems not only reduce the cost of doing business, but also unlock trade opportunities, attract investment, and create jobs. Addressing port backlogs, revitalising rail infrastructure, simplifying regulations, and embracing public–private partnerships are all vital to strengthening the logistics–GDP connection.

While constraints remain, recent policy shifts and infrastructure plans provide a solid foundation for reform. With decisive execution, South Africa can position itself as a logistics hub for the continent – transforming inefficiencies into enablers of inclusive, sustainable economic growth.

Let’s close with a message of hope from our late Tata Madiba: “It always seems impossible until it is done.”