Transport and logistics in SA: well and truly broken

Massive challenges abound within South Africa’s transport and logistics sector. NICK PORÉE lists the areas requiring attention, but be warned: they are plentiful.

The railway crisis continues and the government (to put it politely) has it all “baas about face” again. Government needs to hire an internationally qualified and competent railway chief executive and competent supporting managers. It does not need to deploy another board: however well qualified, it will have minimal chances of success due to lack of understanding of efficient competitive, commercial railway management.

The organisation is locked into its limited captive market with equipment that is degrading towards vintage junk. It needs serious recapitalisation and experienced, qualified, and functional management – not more dignitaries with exorbitant salaries.

Entering the real market for competitive multimodal railway logistics is not possible with the current equipment or management, as demonstrated by the total disaffection of industry. Is anyone planning to build sidings at their distribution centres?

Recently, the Railway Safety Regulator reported the following sorry state of affairs at Transnet Freight Rail to the parliamentary portfolio committee:

• There is a significant R20 billion investment/deferred maintenance backlog.
• Rolling stock recapitalisation requires an investment of R60 billion.
• One third of the 37-year-old fleet is constantly out of service, so reliability and performance is poor. [They did not mention the few hundred Chinese locomotives standing, waiting for spares].
• The signalling system is at the end of its economic life. Only 23 of the 162 signalling installations (14%) have not exceeded their design life.
• There is a loss of critical skills, alongside poor management practices.

Apart from the railways and regional overland exports, South Africa’s logistics system is focused on importing and distributing everything we need, use, and buy. In Durban, there are 70,000 containers and counting stuck at anchor. Meanwhile, “road trains” of trucks are dumping coal on the ground at Richards Bay and Durban, Maydon Wharf.

The queue of trucks at Richards Bay is about 8km long. In Durban, the trucks are being staged at Hammarsdale and released in batches.

Large logistics warehouses and distribution centres are springing up as far as 50km from the port due to a lack of logistics space, while companies are cutting back and streamlining their import supply chains.

Given the sad fact that there is minimal rail service, road freight transport is growing rapidly as the economy relies on everything being imported. Ironically, however, the profits in road transport are steadily declining, with increasing costs aggravated by oversupply, underutilisation, and inefficiency.

The trend has been worsening since 2021, with the current railway failure adding large numbers of uncoordinated and unregulated new entrants to the trucking market. The road to Richards Bay via Piet Retief and Pongola is carrying 20 trucks per hour, day and night, and is deteriorating in places. The railway and port failures are overwhelming the logistics, roads, and handling capacities and increasing inefficiency.

The National Infrastructure Plan and Vulindlela are allocating billions of rands to remote political freeway developments and ignoring the total crisis in the critical infrastructure deficiencies of the logistics systems. It must also be recognised that the government focus on the National Logistics Crisis Committee is putting the cart before the horse and assuming that the tail can wag the dog.

The logistics crisis is definitely hurting our major export industries and eroding the tax base, but the core anti-growth economic policies are slowly destroying the manufacturing and agricultural industries. The policy changes that are required to resolve the issue of reducing industrial outputs and increasing global competitiveness are imported skills and private sector investments and management, not BEE and the central planning of the National Development Plan.

The core issues facing the country include the following:

• A rapidly expanding population, with a large proportion of youth and teenage mothers
• Poor education: 80% of school leavers are untrainable and unemployable for technical work
• Diluted university education, skewed by grants given to no-hopers (and dubious “qualifications”)
• Social grants instead of employment (this is discouraging initiative; living on welfare is the norm)
• SETA training policy, which is causing massive skills deficits in industry (and in some cases the relocation of businesses)
• Skills emigration aggravating skills shortages and increasing due to worldwide shortages
• A labour policy inimical to employment, which promotes mechanisation and automation
• Union demands being applied to non-union employees and firms, closing and deterring businesses
• Declining global competitiveness causing unemployment and currency devaluation
• Localisation and import tariffs causing the reduced supply of necessary imported industrial goods
• Security failure resulting in costs to industries and individuals due to a lack of police and increased theft and vandalism
• Local government failure choking small businesses and aggravating emigration
• Rising transport costs destroying agricultural and small industrial businesses
• Massive wastage, looting, and inefficiency by state-owned companies (SOCs), which cannot deliver on their mandates but refuse to give up their monopolies (Transnet and Eskom are two such examples)

In the transport field, since 1980, we have had the following government “interventions”:

• National Transport Policy Study (1987) – which deregulated road freight transport
• White Paper on Transport Policy (1996)
• Moving South Africa (1999)
• National Freight Logistics Strategy (2005)
• National Transport Master Plan (2010)
• Review of National Freight Logistics Strategy (2016)
• Road Freight Strategy (RFS) (2017)
• National Rail Policy (2019)

Very few of these studies and reports produced any useful policy changes or improvements, due to the focus on government policies and SOC corporate resistance. It is significant that most planning is done behind closed doors, based on unrealistic projected outcomes, with minimal release of real, believable statistical data to motivate the plans.

Now we have the Transport “Roadmap”, which appears to presume that the private sector will willingly follow its directions and impractical suggestions. Talk of the blind leading the blind… and the gravy train still stops at the trough.