Last week, I launched the first export shipment of goods
produced by South African companies destined for other
African countries under the preferential trade provisions
of the African Continental Free Trade Area (AfCFTA) from
the Durban port.
We can expect many more products and many more
shipments to follow as South African companies sell
South African made goods into the massive African free
trade area. Exports to AfCFTA countries already account
for nearly a quarter of South Africa’s global exports. This
figure will now increase quite dramatically.
South African companies have a great opportunity to
take advantage of the AfCFTA by exporting their goods
into the rest of the African continent. In order to take this
great opportunity up, as a country we need to ensure that
our products make it from the factory gate onto the ship
and head towards their destinations with the least
possible delay and at the lowest possible cost.
For some years now the efficiency and competitiveness of
our ports and rail network have been in decline. In order
to give our companies the ability to take up these export
opportunities we need to fix our logistics architecture.
Transnet, which operates our ports and freight rail lines,
has had to contend with severe challenges, including the
effects of state capture, the impact of the COVID
pandemic, natural disasters and rising levels of theft and
vandalism of its infrastructure. As a result, the volume of
goods transported on our rail network has decreased
significantly, forcing more companies to use trucks and
causing congestion on our roads.
Working together with the private sector, we are turning
the situation around, guided by the Freight Logistics
Roadmap that was crafted by Transnet, government and
social partners. The roadmap outlines a clear set of
actions to stabilise and improve Transnet’s performance
in the short term and to fundamentally reform the
logistics system in the long term.
To ensure this work receives dedicated attention, we
established the National Logistics Crisis Committee
(NLCC), which is chaired by the Presidency and brings
together all of the relevant government departments to
drive a coordinated response to the logistics challenges.
We have also established Corridor Recovery Teams which
bring Transnet, the private sector and independent
experts together to improve the performance of strategic
rail and port corridors.
This single-minded approach to improving performance
is already showing results. For example, the number of
ships waiting to berth at the Port of Durban – which has
experienced severe congestion in recent months –
reduced from more than 60 ships in mid-November to
just 12 ships at the end of January.
At the Port of Cape Town, which is preparing for the
important fruit season, Transnet has deployed new
leadership and is putting in place several measures to
improve its capacity in the short term. Seven new cranes,
which are used for moving and stacking containers, were
delivered to the port last month, and the number of work
shifts is being increased to improve vessel turnaround
times.
In addition to these short-term measures, the Freight
Logistics Roadmap includes far-reaching reforms to
modernise our logistics system and enable much greater
investment in infrastructure.
These reforms will introduce private sector investment and competition in port and rail operations, improving efficiency and bringing down prices, while ensuring that infrastructure remains owned by the state.
A key milestone in this reform journey will be the
implementation of ‘open access’ to the freight rail
network, which will allow private rail operators to invest
alongside Transnet Freight Rail for the first time.
Another key step is the introduction of strategic
partnerships in container terminals, which will enable
new investment to expand port capacity and upgrade
equipment. Progress has already been made with the
appointment by Transnet of an international container
terminal operator for the Durban Pier 2 terminal.
Transnet will retain 51% ownership of the terminal and no
workers will lose their jobs once the partnership is
established. The private partner will have full
management responsibility for the terminal and will
contribute both capital and expertise to improve its
performance.
The process of reform takes time and there are no quick
solutions to the challenges facing Transnet. However, the
steps we are taking now will not only improve
performance in the immediate term, but will also create a
truly competitive and efficient system into the future.
This week’s Mining Indaba in Cape Town will showcase
the enormous potential of the mining industry to drive
economic growth and job creation. The actions underway
to improve the logistics system will help us to unlock this
potential, given that mining companies depend on the
rail network and ports to compete in global markets.
From the work already underway, we have shown that it
is possible to overcome the barriers to growth by working
together in partnership. We are building momentum and
have begun to see the results.
As more and more of our products leave our shores,
whether to the African continent or other parts of the
world, more companies will thrive, more investment will
be made and more and more jobs will be created.
With best regards,