Creating a basis for strong demand
Economic turbulence has not bypassed the rainbow nation either. Karl Socikwa, the managing director of Transnet Port Terminals, has nevertheless established that there is a silver lining to today’s clouds. The state-owned corporation Transnet has already started with its billion-rand programme to expand the country’s infrastructure. ITJ correspondent Dirk Ruppik reports on the state of the industry.
These are not easy times for South Africa. Its GDP growth fell to a mere 0.6% in 2016, according to the World Bank. A slight recovery has been predicted for 2017 (1.1% growth expected) as well as for 2018 (2% improvement). At least the southern African republic comes 20th out of the 160 countries ranked in the same institution’s Logistics Performance Index for 2016. The basis for this list concentrates on six core factors – customs, infrastructure, international dispatch, logistics performance, tracking and tracing, and punctuality. The expansion of the country’s infrastructure – it has suffered many years of neglect by now – is due to be pushed forward by a billion-rand programme.
High hopes for high volumes
A study called the Logistics Barometer 2016 that has been published by Stellenbosch University is one important measure of the development of the country’s logistics services (see also page 24 of ITJ 7-8 / 2017).
The paper established freight volumes of around 848 million t (+8.4% in comparison with 2013). Its estimates for 2015 came to around 865 million t, and for 2016 it has predicted a slight decline to 856 million t, largely on account of declining mining exports. More than 80% of all goods are carried by truck. The railway networks are used mainly to export raw materials.
In 2014 the country’s logistics costs accounted for 11.2% of GDP, which was some way above the European average of 8.6%. Despite this framework the analysts have predicted that South Africa’s volumes will more than double in the next 30 years.
South Africa expected to rebound soon
All this means that the nation’s transport infrastructure urgently needs to be expanded. The state-owned entity Transnet, which operates railways, ports and pipelines, has decided that demand will be the paradigm by which it will set its services. In 2012 it published its market demand strategy for 2015–2022. It aims to “make the best possible use of the identified growth potential.” To achieve this, all of the bottlenecks that could potentially hamper the country’s development have first to be eliminated, however. Transnet Port Terminals managing director Karl Socikwa believes that South Africa will rebound from the economic crisis soon, and once again return to growing demand.
The plan is to expand existing railtrack, port and pipeline infrastructure, and increase the concomitant capacities, through an investment programme worth ZAR 337 billion (around USD 25.3 billion). Cargo haulage should be increasingly shifted from the roads to the railways in South Africa too, in order to cut costs and emission. To this end the flow of goods on the railways is set to grow from 226,000 to 350,000 t, which will be achieved by earmarking ZAR 211 billion (which corresponds to USD 14.6 billion) for the expansion of railfreight operations. Another USD 7.2 billion will be set aside for the expansion of the country’s maritime ports, and about USD 1 billion for the development of the pipeline network.
The most important target for the nation is clear: improve productivity and efficiency in the entire transport network, so that RSA can remain the leading sub-Saharan logistics hub and can continue to hold its own against competitor Nigeria.