Transnet’s constant crisis adversity is having a severe negative impact on the South African economy. While South Africa’s railways and ports are experiencing difficulties moving cargo, neighbouring countries are investing in infrastructure upgrades to bolster their logistics industry. Significant financial resources have been allocated to building railways, ports, and roads throughout the Southern African Development Community (SADC) region, resulting in significant advancements in infrastructure and economic expansion.

By Staff Reporter

In December of last year, a consulting firm projected that the South African economy would incur a loss of R353 billion due to issues at Transnet. The decline in volumes at Transnet in recent years has been attributed to a shift of cargo transportation from rail to road.

According to a World Bank index released in May 2022, South Africa’s major ports, including Durban, Cape Town, and Ngqura, are ranked among the poorest performing globally in terms of container volumes handled. Consequently, this has adversely affected the export of goods from South Africa to the international market and the import of goods into the country.

The diminished effectiveness of the ports and railways is a direct result of chronic lack of investment, incompetent management, and heightened levels of corruption.

While the ports in South Africa are facing challenges in unloading cargo, neighbouring countries are hard at work improving their infrastructure to enhance their logistics industry.

Last October, Mesela Nhlapo, chief executive of the African Rail Industry Association stated: “South Africa has more than 150 years of experience with the railways . . . we should be leading and integrating the continent,” she said. “We’ve not stepped up.”

Substantial financial resources have been invested in railways, ports, and road construction across the Southern African Development Community (SADC) region, leading to a significant surge in infrastructure development.

However, Duncan Bonnett, a partner at Africa House, cautioned in an interview with Freight News that the biggest portion of this investment is directed from the eastern to the western regions, completely bypassing South Africa.

“This not only bears significance for the logistics and freight sector but also affects South African manufacturers gradually being isolated from markets to the north of the country. While it may not impact our trade with places such as Namibia, Botswana, or the Sacu countries, its repercussions will extend farther afield,” he told Freight News.

Bonnet asserted that the Angolan government is actively engaged in efforts to facilitate the advancement of the Lobito Corridor. A feasibility study was expected to commence at the end of 2023 after the signing of a memorandum of understanding encompassing Angola, the United States government, the Democratic Republic of Congo (DRC), the European Union, and Zambia. The initiative entails the enhancement of the corridor and the construction of the Zambia-Lobito rail line.

The project is anticipated to finish within five years, showing a dedicated effort to advancing the corridor’s development.

Bonnett pointed out that by analysing the size of copper projects currently being carried out in the Democratic Republic of Congo and Zambia, the justification for the establishment of this corridor becomes apparent. Additionally, Ivanhoe Mines disclosed a copper exploration initiative in Angola, expressing significant optimism regarding its potential.

“Considering the current trade volume already reaching four to five million tons of copper annually, with projections indicating sustained growth, the significance of the Lobito corridor becomes apparent. When factoring in the backhaul of cargo such as sulphur, acids, solvents, chemicals, and mining equipment, it becomes evident that this corridor is poised to gain prominence.”

He stressed the significance of South Africa increasing its efforts and allocating resources towards the advancement of strategic corridors to maintain a prominent position in the future of the SADC.

Walvis Bay into a key logistics centre for the southern part of the SADC region, including the Zambia Copperbelt. It is important to note that the EU is actively participating in these initiatives, with a specific emphasis on green hydrogen. There are also intentions to extend railway lines beyond Grootfontein, connecting them to the Zambian system.

Shifting attention to the east, the DRC and Zambia are collaborating to establish a new trade route through Tanzania to enhance their export capabilities. Discussions about streamlining border processes are already in progress. Additionally, there have been agreements between Mozambique, Malawi, and Zambia regarding the management of the Nacala Corridor.

Malawi is planning to construct a dry port at the ports of Beira and Nacala, further strengthening its connections to the Mozambican corridors. The Beira Corridor is already seeing an increase in traffic from the Democratic Republic of Congo, Zambia, and Zimbabwe.

Additional reporting by Freight News

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