The Future of Freight Logistics in South Africa

The history of South Africa is too often described in terms of conflicts and competition, without recognition of the cooperation between all those who enabled the creation of the most advanced society on the continent, says NICK PORÉE.

The symbols of our ruling party – the wagon wheel and assegai – commemorate progress and resistance but do not promote recognition of the collaboration and efforts of the many peoples who contributed to creating our modern facilities, infrastructure, and industries over the last 200 years.

The transition from tribal to bureaucratic government retains the arrogant dominance of power (as Baron Acton noted, all power corrupts and absolute power corrupts absolutely) and throttles the private initiative that drove our past success.

In the field of freight logistics, this has led to continual debate about competition. First, the ox wagon gave way to the train (operated by the government). Now the train has given way to road vehicles operated by the private sector, with no serious attempt at changing the dialogue to include cooperation, coordination, and integration of freight logistics to optimise all modes.

The organisational separation of railway and ports to government, and road and air freight to the private sector, has crystallised the “competition” and precluded the coordinated planning that is so apparent in the developed world.

Cooperation, coordination, and competition are not within the competency of government institutions, as they are not the owners of the means of production and therefore cannot make logical commercial decisions.

When the road freight industry was deregulated, despite the projections of modal switch, the government failed to recognise the predictable consequences. As a result, railways lost cargo and revenue; branch lines, stations, sidings, and marshalling yards were abandoned; ports’ road freight handling facilities became inadequate; roads became congested; and consumer goods distribution became centralised from major cities to entire provinces, killing off small businesses. Fuel, fertiliser, grain, animal feeds, industrial supplies, and containerised import cargo moved to road distribution. There was no evidence of interest or planning for the realities of modal change by provincial or central government, apart from the continual bleating about road wear and putting freight back on rail.

By contrast, countries such as the Netherlands have a 40-year history of scientifically planned integration and development of freight transport, in all modes, to coordinate it with the development of industry and social needs. It is recognised that the logistics sector has major economic importance and makes a substantial contribution to the Dutch economy. The Ministry of Economy, Agriculture, and Innovation has therefore put together a team of leading public and private parties and the resources to support it. Some time ago, this top logistics team formulated the following ambition: by 2020 and beyond, the Netherlands will occupy a leading international position
(1) in the handling of goods streams,
(2) in managing the chain for (inter)national logistical activities, and
(3) as a country which offers an innovation and investment climate to attract transport and logistics businesses.

Sustainability plays an important role in these ambitions: freight transport must be organised in a socially responsible, environmentally friendly, and future-proof way.

In the UK, the Government Office for Science published a White Paper on the Future of Mobility. The review sets a coherent strategy and direction for 2020 and beyond (in contrast to the South African White Paper reviewed last month). UK rail freight is demonstrably a success, increasing its market share of land transport from 8.5 to 11.5% and increasing the volumes moved by 60% since privatisation.

The present structure of the UK railway industry encourages private investment and competition on a national level and within EU borders, so that as a result, traffic volumes and customer satisfaction will grow. In Germany, integrated road-rail freight logistics is an integral part of the industrial economy with a number of railway companies serving the entire country (over 20 companies run trains out of the port of Hamburg).

In the US, the willingness to undertake regulatory reform was enhanced by the findings and conclusions of several academic studies. By 1960, one-third of the US private rail industry was bankrupt or close to failure. This situation forced the policymakers to act promptly and wisely with the termination of the Interstate Commerce Commission in 1995. This freed the privatised railways to reposition themselves into one of the most efficient industries in the country. The development includes intermodal connectivity and optimised integration of all modes.

South Africa has a totally disaggregated and uncoordinated freight transport system with ownership, management, and interference by different ministries and agencies, whilst the national logistics activities are directed (and paid for) by the producers of goods, which are all in the private sector. The rapidly rising cost of logistics is destroying mining, farming, and industrial production and contributing to further unemployment. The kilometres-long queues of vehicles on the routes to Richards Bay, Lebombo, and the port of Durban provide evidence of the failing state-owned corporations (SOCs) and the lack of competent integrated planning by industry and government.

In the rest of southern Africa, there are dynamic developments in logistics, with ports in Dar, Beira, Maputo, Mombasa, and Walvis Bay expanding with new private terminals; railway lines being built, upgraded, or reopened in Mozambique, Namibia, Tanzania, and Uganda; and the redirection of import and export freight to more efficient corridors.

The South African situation is aggravated by the lack of informed, scientific, and independent professional research in the field of logistics and the governmental focus on the SOC monopoly. Current pronouncements on road to rail, third-party train operations, logistics coordination, and development of intermodal freight are all chimaeras, due to the vested interests and protected positions of the protagonists and their insulation from the consequences of failed services.

It is to be hoped that the imminent collapse of the SOCs and functional reorganisation of transport will introduce an era of coordinated professional planning. This, however, will only be effective if it includes the modal, commercial expertise available in the logistics industry – but so obviously lacking in government.