It is easy to be gloomy about logistics, and many are. But the concerted effort that business, government, and many in Transnet itself, have made to fix the outlook, is starting to have some effect.
There has been a flurry of positive news this month. First, nine new members were appointed to the Transnet board, including new chair Andile Sangqu, the former head of Anglo-American South Africa. This is a strong raft of experienced leaders with excellent business, logistics and public sector experience who can support CEO Portia Derby and CFO Nonkululeko Dlamini.
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Then, Transnet took a significant step forward to the concessioning of a large part of the Durban Port, which handles 72% of Durban’s through put, by announcing International Container Terminal Services – a Philippino operator that manages 34 terminals in 20 countries – as preferred bidder for a joint venture to upgrade Container Terminal Pier 2.
Of course, there is some way to go until agreements are complete and investment can begin, but there is a tangible sense of progress.
Boegoebaai
Next, Transnet took a step forward in the development of infrastructure in the Northern Cape, shortlisting three respondents to submit proposals for the design, funding and construction of a planned port and rail infrastructure project linked to Boegoebaai.
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This could open up significant opportunity for the mining sector and potential green hydrogen projects in the province. Again, there is a long way to go until soil is turned, but progress is happening.
This is not to say the problems have been solved – far from it. Many companies are still struggling to gain access to sufficient capacity to move their output down rails or out of ports.
As a result, they cannot expand, invest, or employ more people. This problem is multi-faceted, ranging from criminal gangs vandalising rail and equipment to a shortage of spare parts.
This is a still a prime motivator for gloominess, which emerges in the results of companies like Kumba Iron Ore which is having to reduce production because it cannot get enough of its output onto rail to reach the ports.
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The efforts to fix the wider logistics system are now being driven by a National Logistics Crisis Committee (NLCC) through which government and business are working together to deal with the challenges.
Several top CEOs with strong logistics and transport experience will work alongside top government leaders and Transnet senior executives. Business has agreed in principle to back the NLCC with funding, which will rely on the presidency’s effective Operation Vulindlela as secretariat.
There is a long list of challenges for the NLCC to tackle, from rail capacity to congestion on the roads and land border crossing points.
Modelling by academic Jan Havenga suggests that last year our GDP was reduced by 6.68% because of the logistics crisis. Together with our electricity crisis, so much economic potential is being squandered.
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The NLCC model borrows from the National Electricity Crisis Committee, set up last year, that has been effective in mobilising resources and driving a multi-faceted plan to deal with the crisis. Both Necom and the NLCC draw business and government together in partnership to unlock blockages and fix policies to overcome the respective crises.
I hope the NLCC will in time make progress of the sort Necom has, in rapidly shifting policy blockages, stimulating private sector responses and pushing through much needed restructuring.
Good progress is now being made to deal with the electricity crisis, including massive amounts of new investment by the private sector to expand generating capacity.
Recent progress by Transnet, and the establishment of the NLCC, indicate to me early positive momentum on dealing with the logistics crisis.
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It lags the effort on electricity, but the direction is the right one and with positive commitment by Transnet, government and business, it could achieve similar things.
Business is a critical part of these efforts, and we will continue to rally the expertise and other resources needed to ensure their success. We now appear to be on the right track, and I look forward to working with partners to ensure we stay on it and accelerate progress.
Busi Mavuso is CEO Business Leadership South Africa (BLSA).
