The Department of Transport has called on the private sector to work with government to improve the country’s logistics sector.
A discussion on South Africa's ports and rail infrastructure was hosted by Absa in Durban on Thursday.
Mthunzi Madiya, the Deputy Director-General: Maritime Transport Branch in the Department of Transport, outlined the critical importance of port and rail infrastructure to the country’s economy.
“Maritime transport is an integral part of the global supply value chain.
South Africa has a coastal line of about 3000 km and eight commercial ports play a critical role in international trade. The South African economy is largely dependent on the port and rail infrastructure to perform efficiently, and it is crucial that these assets be managed in a way that makes a meaningful contribution to the South African economy.”
Madiya added that current challenges in the port system were well-known.
“Service quality in freight logistics has declined largely due to underinvestment in the maintenance, modernisation and expansion of the ports network infrastructure. The reliability of the South African freight rail network has deteriorated sharply; port inefficiencies, as a result of equipment breakdown, weather conditions and ship turnaround times, are a real threat to the competitiveness of the export sector.”
Madiya said that volumes transported on coal rail lines have declined to their lowest levels since 1993.
“General freight volumes have fallen more sharply; volumes transported on the rail network as a whole declined 226 metric tonnes from the 2017/2018 financial year to just above 149 million tonnes in the 2023/2024 financial year.
“As a result of these inefficiencies, cargo has been diverted to ports in Angola and Mozambique. Vessels calling at the port remain low; it’s only in the cruise line industry that we have seen an improvement.”
Madiya added that President Cyril Ramaphosa announced in 2023 that the government would develop a Freight Logistics Roadmap that will translate policy commitments into reality.
“This included the restructuring of Transnet Freight Rail to create a separate infrastructure manager. This roadmap outlines the range of actions required to restore the effectiveness and competitiveness of key industries in the supply chain, such as the port and rail.”
Proposed reforms in the roadmap to improve port performance include promoting competition and private sector participation in port operations.
Madiya said that the pursuit of partnerships between the public and private sectors was crucial for inclusive economic growth and development.
“The Economic Reconstruction and Recovery Plan explicitly calls for more partnerships with the private sector to crowd in private investment to address the country’s developmental challenges. For instance, private sector participation is needed to close Transnet’s funding gap. A Transnet infrastructure manager has been established.”
Global supply chain expert Lebogang Letsoalo said that the transport industry contributed more than 9% to the economy of South Africa.
“In the 2019/2020 financial year, the transport sector contributed more than R390 billion to the economy.
Transport is the backbone of the South African economy; without transport, nothing will happen.
“We need to be investing in transport and investing in having a logistics hub. If we invest in the logistics sector, we can enable other sectors in the economy to grow. Remember, sectors like manufacturing still need transport to move products.”
Letsoalo added that transport and logistics stakeholders need to ensure that there is growth in the industry.
“The African Continental Free Trade Area, which focuses on growing the economy of Africa as a whole, has listed the automotive industry as one of the areas to grow the economy in Africa.
“That is why we need to be fully prepared to grow this sector.”