The sorry tale of SA Logistics: 30 Years On
The sorry tale of SA Logistics: 30 Years On
As we start the year 2024, it is interesting to note that this marks the 30-year anniversary of the change of government in 1994. NICK PORÉE looks back at the trends in economic growth, as reflected in the annual change in gross domestic product (GDP) over past 30-year periods.
Using GDP as the indicator of the profitability of the country, it can be seen that in the period after World War II the South African economy grew rapidly. It started to lose momentum, however, from about 1970 up to 1990, as political pressures and sanctions reduced investment and business. The rise and fall of GDP over the 30 years from 1960 to 1990 was mirrored by the inefficiency of the logistics systems in meeting the needs of industry.
In that period, the railways transported about 180 million tonnes of cargo, of which 83% comprised low value bulk commodities. There was continual pressure from industry to permit increased use of road freight transport. The issue was debated in the proceedings of the Schumann Commission and again in the Marais Commission of 1969, but always with emphasis on the tariffs and earnings of the railways and minimal evidence of the issues of speed, reliability, flexibility, and convenience offered by road haulage.
The debate raged on, with industry seeking to make its own business decisions and government intent on central planning. Eventually, in 1980, the Department of Transport commissioned the National Transport Policy Study (NTPS), which recommended the deregulation of road freight transport and open competition based on user selection of the mode of choice.
The period 1994 to 2024 coincided with the change of government and increased international trade and industrial growth, supported by rapid expansion of road freight transport. The competition from road hauliers rapidly reduced the railway share of high value cargo and caused it to abandon facilities and withdraw from haulage of breakbulk completely.
It is significant that, during this most recent 30-year period, the railways have deteriorated steadily to the point where road haulage is increasingly used by industry for low value cargoes.
The lack of vision and competence in the management of the railways has resulted in a decrepit and floundering rail system, which relies on the same monolithic monopoly protection perspective and resists the obvious need for competitive discipline. Throwing billions of rands into the state-owned enterprise will not achieve the long-term profitability or future efficiency of the logistics system. It simply uses public money to permit one company to block the development of a commercially competitive intermodal logistics industry (such as exists in other countries).
The decreasing GDP over the period has aggravated the rising crisis in the logistics systems and underscores the need for privatisation, competence, competition, and revitalisation. South Africa has once again reached the 30-year “crunch point” where drastic revision of the economic model is required to resolve the issues of rising unemployment, government debt, disinvestment, and increasing political disaffection. In stark contrast, the widespread public–private partnership developments in transport and logistics that are taking place in Mozambique, Zimbabwe, Angola, Tanzania, and Namibia are attracting investment and reducing South Africa’s competitiveness in the region.
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