FROM MAGAZINE: Big plans underway for South Africa's transport and logistics sector

South Africa heads towards expansion to overcome the biggest challenge of inadequate infrastructure. As transport and logistics has a huge impact on the overall economic growth, the short and long term developments planned will prove to be a boon for the economy in the coming years. Twinkle Sahita

Africa, a continent with 54 countries, has a lot of potential when it comes to the transport and logistics sector. Amongst the 54 countries, South Africa is heading towards expansion in terms of improving infrastructure for the sector at great pace. This key emerging market faces obstacles of rigid labour policies, poverty, unemployment and income inequality. However, at the same time, it has the greatest advantage of open trade policy and a comparatively strong domestic market.

There are various developments planned at South Africa’s airports in order to maintain its competitiveness with global standards. Airports Company South Africa operates nine of South Africa airports. Out of nine, the three main international gateways are OR Tambo in Johannesburg, Cape Town International Airport and King Shaka International Airport in Durban.

South African Airways (SAA) is the national flag-carrier which continues to hold considerable aviation market share in Southern Africa and has considerably expanded the number of African destinations to which it now flies. Especially, the air cargo industry in South Africa has great future prospects regardless of the sluggishness in the economy.

“We are currently involved in a process of renewing our long haul passenger fleet that will provide more capacity for our customers. In addition to that, we have taken delivery of two replacement aircraft, B737- 300 - Fs.”

“Our vision is to have three types of freighters: the current narrow bodymedium size freighters that we operate, the 737 fleet. We will also acquire smaller size aircraft for the domestic market and medium range aircraft for regional markets,” informs Tleli Makhetha, general manager, South African Airways Cargo (SAA Cargo).

The commodities transported to and from South Africa include a mix of general cargo, perishables, pharmaceuticals, high tech goods, computers, and telecommunication equipment.

“We remain committed to focus on growing African export business serviced through our Johannesburg hub. We have positioned ourselves to be a key gateway for the region and also make use of the hub as the feeder to rest of our domestic network.”

“We are planning to improve our presence in West African markets in order to strengthen trade movement between Southern and West African regions. We are also looking at expanding our markets into the United States via West Africa. We have launched services between Accra in Ghana and Washington DC in United States. We are considering launching other routes from West Africa into the United States as well as from West Africa into Europe. We are also planning new routes in some southern & eastern African countries and also increase frequencies where we see demand,” adds Makhetha, SAA Cargo.

Last month, LATAM Airlines started new service to South Africa with a Boeing 767 aircraft. The new service further expands the connectivity offered to passengers, making LATAM the only Latin American carrier to operate flights between region and the African continent.

“We strive to take our customers further and with this new Johannesburg service we will connect four continents and passengers on both sides of the Atlantic,” said Claudia Sender, president of LATAM Airlines Brazil.

South Africa has eight main commercial ports. Some focus almost exclusively on bulk commodities, while others serve one major industry only, such as the offshore oil industry in the case of Mossel Bay. Richards Bay has the world’s largest bulk coal terminal.

Durban is Africa’s busiest port. Port of Durban has a market share of 29 percent of South African cargo. It handles containers, automotive cargo, breakbulk (including abnormal cargo, steel commodities and project cargo, neo-bulk, timber, steel coils and other steel profiles), and agricultural bulk (such as wheat, maize, soya bean meal, animal feed, woodchips). The Port of Durban will see investments to the tune of 27 billion for projects over the next 10 years aimed at creating capacity ahead of demand. This is part of the Transnet Market Demand Strategy (MDS) which is now in its fourth year.

Ngqura, which opened in 2009 near Port Elizabeth in the Eastern Cape, is the deepest container terminal in Africa.

Over the past two decades various factors have led to a modal imbalance in South Africa’s surface transport flows with road infrastructure being over-utilised and the rail system being under-utilised. This contributes to less competitive costs of logistics for the nation. Furthermore, rail transport is an inherently more environmentally friendly mode than road and greater use of rail could lead to reductions in the cost of externalities (eg. air and noise pollution, road congestion, road damage, road safety, etc.)

Global rail transport technology company, RailRunner is introducing hybrid trucks in South Africa. The implementation of the Bimodal Transport Systems on the CapeCor(Johannesburg – Cape Town – Johannesburg corridor) will be undertaken through a Joint Venture company being established between Transnet, South Africa's state-owned ports and rail company, and RailRunner SA.

“We are planning to run a pilot on the Cape Corridor by mid-2017. The company is currently in the process of finalising all technical designs, and upon signoff from the Engineering team, manufacture of the technology will commence in South Africa,” says Transnet Freight Rail through a statement.

This technology is initially intended to target the domestic intermodal market, which requires flexibility, agility and cost effective solutions. It will reduce terminal throughput, and is more efficient than any other intermodal solutions currently offered in South Africa. The vans or trailers are very similar to those currently used by road, except that they are built slightly stronger to withstand in-train forces.

The business model will ensure a door-to- door service offering, which will also assure a one-stop- shop service to customers. Customers will only communicate with one person for the door-to- to service, as opposed to the current arrangement with many interfaces.

A significant capital investment programme is being executed to create capacity, modernise the rail system and improve safety and efficiencies as a part of seven year Market Demand Strategy. Key tenets of this strategy focus on development of markets and sectors that convey traditional and non-traditional commodities suitable for transportation by rail. Transnet plans capacity and investment on a 30 year time horizon to ensure appropriate facilities for the country’s development and growth over the long term. The investment view is refined annually in line with prevailing market demand and customer requirements.

In the short to medium term, exciting rail sector developments lie in the growth of rail volume and market share through supply chain or logistics solutions and growth of intra-regional trade.

The choice of transport mode – road or rail – lies with the customer. Some commodities are naturally (and competitively) more suited for road or for rail. Choice depends on a number of factors such as distance, parcel size, mass, loading capabilities.

There is an increasing need for efficient and effective intermodal transport solutions across a supply chain. This requires collaboration between road, rail, ports and customers. Transnet has strategies in place to play an increasing role in such solutions. This is a national imperative for the country’s transport and logistics system.