Investing in the future
South Africa, the continent’s strongest economy, is still banking on logistics and transport as a flywheel of its development. Even if the raw materials slump is creating problems for the country, it nevertheless still has some great international and national opportunities, for example for exports to India. Chinese financiers, amongst others, are ensuring that the railfreight segment continues to flourish.
The country is on the right path. Projections show that demand for cargo transport in South Africa is set to grow by between 200 and 250% in the next 15 to 20 years, with the important corridor between the provinces of Gauteng in the north (with Johannesburg) and Western Cape in the south (with Cape Town). The government has made the trend one of its core concerns. It will provide around ZAR 813 billion (more than USD 50 billion) for infrastructure projects between 2016 and 2018, including international ones.
Ports and railways
The construction of a new deepsea port near Durban – which is now in the planning phase – is one of the projects with an international orientation.
The state-owned logistics enterprise Transnet’s market demand strategy is also being implemented. Transnet, which operates ports, terminals and the country’s railfreight network, wants to expand coal and iron ore corridors, amongst other things. Declining demand for raw materials has led to a reduction in planned funding of about ZAR 337 billion (around USD 21 billion). In December 2015 the China Export Credit Insurance Corporation (Sinosure) nevertheless gave Transnet a financing guarantee worth USD 2.5 billion. The programme is expected to be completed by 2024.
South Africa, one of the most important mining economies in the world, may also make the best of opportunities arising as a result of collapsing raw materials markets. In 2015 the country shipped out 75.4 million t of coal, a record. 36 million t went to India, via the port of Richards Bay. The latter figure grew by 16.6% vis-à-vis the previous year, with South Africa filling a gap left by lower Indonesian production volumes.
South African bituminous coal can compete better in India today, on account of advantageous freight rates for its shipment as well as its strong thermic qualities. Private stakeholders, such as Glencore and Anglo American, are set to invest approximately ZAR 1.4 billion (about USD 86 million) in expanding the Richards Bay Coal Terminal.
Results and volumes
Transnet’s figures for March to September 2015 (the latest available) tell a rather mixed story. Income grew by 6.4% to ZAR 32.2 billion (about USD 1.9 billion), with container and car transport contributing strongly. This field grew by 4.2% to 7.5 million t of freight. The volume of dry bulk and breakbulk handled in port terminals improved by 11.8%.
Volumes in Transnet’s railfreight activities, however, which it carries out in 17 African countries, declined by 1.8%, to 108.5 million t. The research enterprise Oxford Business Group has estimated that 71% of the 734 million t of freight handled annually in the country is transported by road.
A lively domestic market too
South Africa’s national market boasts a population of nigh on 55 million people, offering businesses plenty of opportunities. Imperial Logistics’ Fast ‘n’ Fresh unit recently secured a distribution contract for Gauteng province from foodstuffs producer Nulaid.
Imperial Logistics also carried out a humanitarian operation not so long ago, providing the drought-hit towns of Senekal, Olifantshoek and Verkeerdevlei in the Orange Free State with 350,000 l of water. Additional trucks carrying animal feed were deployed to supply farmers near Bloemfontein too.