Transport and logistics: privatisation pioneers
Transport and logistics: privatisation pioneers
Private initiative in South Africa has been the driving force in the country’s development, despite government resistance and attempts at control. NICK PORÉE notes that despite all policy pronouncements, privatisation “just happens” when government fails to provide.
Privatisation has happened in education, health care, public transport, security, and transport. In fact, transport and logistics in this country have always been driven by the initiative of private pioneers, despite the extensive nationalisation since 1900. Private initiative designed the unique South African ox wagon – the most robust and versatile means of transport for 300 years. It was private initiative and the capability of the wagon that drove the pioneers (voortrekkers) to venture into the interior of the continent in the 1880s to seek opportunities free of government regulation.
The wagon served as a home, fort (when chained into a laager), and also transport. It was purpose-designed for travel across the country – with all parts removable and replaceable by hand-tools. With the discovery of gold and diamonds, farmers became rapportryers (carriers); the ox wagon made it possible.
Due to the growing demands of industry, wagons were superseded by railways, which were motivated by private farmers and businessmen who formed the parliaments of the time. The railways and ports were nationalised into one entity along with ports and airways in 1900. From 1930, private transport initiatives were constrained by regulation despite continued resistance. According to This is SAR&H – Railways Handbook, in 1977 the railway “was prepared to move to a climate of freer competition” but expected to be able to dictate the terms.
By the 1980s, it was clear that one national railway company could not meet the logistical needs of the country and that wholesale privatisation of transport was taking place using road motor vehicles. In 1984, the Department of Transport commissioned Rand Afrikaans University to design the necessary regulatory framework to manage the nascent road freight industry; this industry would inevitably explode as the result of repealing the railway monopoly on long haul freight. The development of operator quality regulation was derailed by the industry and government so that, 40 years later, we have problems with uncontrollable privatisation of freight transport.
The privatised road freight operators now use about 400,000 vehicles to move approximately 1.6 billion tonnes of cargo per year on long and short haul, while the railway hauls 150 million tonnes of bulk cargo. Unfortunately, due to government failure, the road freight industry is unregulated (apart from road traffic regulations; nobody knows who is in the industry: their vehicles, drivers, businesses, or even their identities. This places road freight in the same position as the minibus taxi industry, where an estimated 250,000 taxis operate within a nebulous “industry” that includes cut-throat competition, minimal quality regulation, brutal mafia controls, and criminal attacks on other competitive transport modes.
With the declining capacity of railway over the past four years, there has been a massive surge in the numbers of bulk road carriers transporting coal, ferro-chrome, manganese, and other bulk minerals to ports. Queues at Lebombo (to Matola), Richards Bay, and Durban are five to eight kilometres long (or confined into parking areas); it can be estimated that, with arrivals of about 3,000 vehicles per day, there must be upwards of 9,000 vehicles engaged in the trade with no effective way to identify the operators or monitor their behaviour.
The current decline in the prices and volumes of platinum group minerals (PGM) may presage a reduction in market prices or demand for other minerals, and the road freight market will be reduced by any revival of railway capacity. The cumulative effect of these developments will be oversupply, competition, and confrontation from the mass of newly invested bulk operators.
There are already indications from Richards Bay that the trucking industry includes “mafias” and “forums” just as capable as the taxi industry of engaging in lawless actions to protect their market. The 40th anniversary of our total lack of effective regulation may not be pleasant but, with elections ahead, it is to be hoped that government policy can still be motivated to address the problem.
There is an urgent need to implement the Road Freight Strategy approved by Cabinet in 2017 and to stop trying to plan the future of the “transport industry” with roadmaps and committees. The basic structure of the industry is flawed and incapable of regulation by existing agencies. The National Transport Economic Regulator is a bureaucratic attempt at regulating an amorphous mass of operators, 70% of which are for their own account. The functions and capacity of the Regulator are unrealistic in relation to the realities of the road freight market situation; the sheer numbers and diversity of transactions are beyond the functions of a regulator, which include the following:
(a) exercise economic regulation of transport facilities and services in line with national strategic objectives;
(b) regulate the provision of adequate and efficient transport facilities and services;
(c) promote efficiency in transport facilities and services by facilitating competition, where possible, and implementing regulations;
(d) promote equitable access to transport facilities and services;
(e) promote appropriate, adequate, and efficient investment in transport facilities and services;
(f) research market structures and service delivery in order to determine whether or not particular entities, markets, facilities, or services within the transport sector are functioning competitively; and
(g) determine price controls for transport facilities and services.
There is a need for professional research and analysis of the industry, as well as plans to regulate it using the principles of transport regulation – in collaboration with private sector road freight associations – to create effective quality regulation.
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