Is the Government of National Utility good GNUs for transport?

As we now have a Government of National Unity (GNU), NICK PORÉE says it is relevant for the transport and logistics industry to reflect on what might have been – had this national unity included more than just government departments.

Nationalisation has for many years been one of the major impediments to the economic performance of the country, with nationalised industries (the state-owned companies) having soaked up more than R280 billion in bailouts and support (with more to come) without delivering on their mandate to supply utility. We really need the GNU to unify government actions with the efforts of the private sector to create industrial growth, employment, and private wealth.

If the economy had been freed of the shackles of government’s nationalised involvement in industry, we might have had many railway companies, port terminal operators, and intermodal logistics companies, all operating in and supplying normal regulated competitive markets to match economic demand (without massive bailouts and millionaire ex-employees). The rapid expansion of the road freight and passenger transport industries is evidence of the extent of the demand for transport, even in our tepid economic climate. If there is to be a more positive focus on economic growth, it will be severely challenged by the limitations of the currently restricted logistics facilities.

In the realm of economics there are four major forms of utility: form, time, place, and possession. They may be summarised as “the right product, at the right time, in the right place, safely delivered to the customer’s satisfaction”. It is very obvious that the state-owned transport and logistics enterprises and departments, with their monopoly control of markets, are not achieving this utility.

The railway system for goods and passengers has virtually collapsed due to bad management, lack of maintenance (and security), and some malfeasance. This is due to a lack of oversight, control, and the discipline of competition and accountability which are the norm in commercial businesses. Had private sector businesses been allowed to flourish, we would not now have our second railway-induced economic crunch (the last one was in the 1980s), adding to our massive national debts. The danger with the current railway restructuring is that the bureaucratic fear of the discipline of competition and accountability will resist “open access” and seek to cling to “national” control, thereby forestalling private investment and the positive impacts of industrial efficiency.

The national ports system has been starved of maintenance, upgrades, modernisation, expansion, and external infrastructure support. Capital spending was diverted to political objectives (Ngqura), causing the ports of Richards Bay, Durban, and Cape Town to now be 20 years behind in terms of capacity and efficiency. This is evidenced in their World Bank ratings as the worst in the world. The impacts are having serious effects on South Africa’s trade and its standing as a regional hub. Recently, Durban Pier 2 had 260 over-border container units on hand with a dwell time of 31 days and a growing fleet of ships at anchor. No wonder we are losing trade to other regional ports.

The ports of Durban, Cape Town, and Richards Bay all suffer from serious restrictions in terms of road access to the ports. After many years of talk, however, there are still no major plans to correct the situation, whilst we spend billions on bridges in the Transkei. The access problems will limit effectiveness of port terminal privatisation and continue to inhibit growth and efficiency. The solution requires professional analysis and a vision for the future involving city, port, and industry to meet the logistics needs for economic growth. In the meantime, our regional neighbouring states are expanding their port capacities with privatisation and investment in modern facilities.

The delays on South Africa’s borders average 20 to 28 hours despite the fact that 22.8% of our export trade goes through these borders into the region (and 82% to Southern African Customs Union countries). The weekly cost of the transport delays at the worst six borders is about US$60 million, which reduces South Africa’s competitiveness with foreign imports to the region. Zimbabwe has led the way with a complete rebuild and privatisation of the Beitbridge border to modern levels of efficiency. The third bridge is needed, and the creation of a One Stop Border is urgent if government wants to support the industry into the future.

It is widely recognised that the key issues in South Africa are economic development and increased employment, but the official psyche is still locked into “nationalised control”, which is directly contrary to the commercial development of competitive industry. The result is disinvestment and deindustrialisation, which offer no solutions to our R3.3 trillion national debt and 24% unemployment.

South African transport and logistics must get competitive in all modes to support a positive economic trajectory from our GNU.