South Africa’s other Eskom-sized crisis

 ·31 Jul 2023

Following hot on the heels of the Eskom electricity crisis, South Africa is also trying to make headway in resolving its logistics crisis – using the same resolution model.

According to Business Leadership South Africa chief executive Busi Mavuso, just like the National Electricity Crisis Committee (Necom) is working to resolve load shedding and energy shortages, businesses are working closely with the National Logistics Crisis Committee (NLCC).

Through the NLCC, government and business are working together to deal with the many challenges facing the country’s logistics sector, including blockages at ports which are costing companies billions.

“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,” Mavuso said.

“Recent progress by Transnet, and the establishment of the NLCC, indicate early positive momentum on dealing with the logistics crisis. 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.”

The chief executive highlighted the positive turns in the logistics sector:

  • 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.

  • Transnet took a significant step forward to the concessioning of a large part of the Durban port, which handles 72% of Durban’s throughput, 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.

  • 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. This could open up significant opportunities for the mining sector and potential green hydrogen projects in the province.

While these measures will go a long way to helping South Africa overcome its logistics challenges, Mavuso said it does come with the caveat that they are very long way away from being implemented and followed through.

She also added that there are a host of other problems that still need to be addressed, adding to “gloominess” around the sector.

“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,” she said.

However, it remains that progress is being made and that South African businesses are on board to help deal with the crisis, she said.

“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,” she said.

Read: South African households are beating Eskom at its own game with rooftop solar

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