Construction World November 2023

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THE ECONOMIC TOLL OF PORT AND RAIL INEFFICIENCIES

At the heart of South Africa’s economy lies a colossal transportation network comprising both port and rail. However, recent years have witnessed a decline in its efficiency, resulting in economic losses that ripple far beyond its infrastructure. Siyabonga Mthembu, Audit Partner at BDO ( pictured ), and Lance Petersen, Chair of the Nelson Mandela Bay Business Chamber’s transport and logistics task team, share some insight into how these inefficiencies are not just logistical hiccups; but are causing a tide of economic devastation that the nation cannot afford to ignore.

I t has been estimated that the collective cost of port and rail failures over the last 18 months is in the region of R150b. From another perspective, the collapse of Transnet is set to cost the country R1b a day in economic output, the equivalent of 4,9% of our country’s annual GDP or R353b. Take a moment to let those numbers sink in. Recognising the gravity of the situation, President Cyril Ramaphosa has agreed to establishing a National Logistics Crisis Committee (NLCC) following the business sector’s urgent appeal. While this promise of a radical intervention gives the economy some hope, is it a case of too little too late? One of the main areas that requires immediate attention from all sectors is rail. The current state is that the number of locomotives and rail movements are far below the installed capacity of the South Corridor running between the Eastern Cape and Gauteng. Challenges include the lack of locomotives, as has been reported in the press. The quickest solution in terms of a timeframe to getting much needed locomotives would be

the Chinese suppliers. However, this route has been plagued by obstacles and even the visit by Minister Pravin Gordhan and his delegation to China does not seem to have resolved all the issues. Looking at alternative suppliers to service the locomotives would increase the timeline to 18 months minimum. Another problem is the ongoing issue of cable theft. While this scourge seems to have infiltrated all areas of society, the impact on rail has been immense as electrified rail locomotives cannot run if the supply of electricity to the line is interrupted. Currently the automotive industry alone is spending millions on armed escorts for their cargo that is being transported on road which should be on rail. This added cost is passed on to the end consumer at the end of the day. The case to move cargo from road to rail is strong. Immediate benefits would include a reduction in trucks on roads, reducing accidents as well as reducing the need for rehabilitation of roads; reduction in impact of carbon emissions with rail being much less carbon intensive than

8 CONSTRUCTION WORLD NOVEMBER 2023