KZN SAPOA members met over breakfast at Garlicke & Bousfield’s premises on Umhlanga Ridge, to hear the good, bad and ugly of the future of freight in South Africa, from lively Freight Logistics Specialist, National Department of Transport, Mihlali Gqada
Garlicke & Bousfield’s offices provided an excellent setting for discussing the country’s freight and logistics challenges, with insights from expert Mihlali Gqada. Before that, Warwick Lord introduced attorney Simphiwe Maphumulo, a director at Garlicke & Bousfield since 2008, specialising in property law and development, highlighting the firms extensive expertise.
Gavin Minnaar of Umthunzi Energy was up next to explain Energy Performance Certification (EPC), which verifies building energy efficiency. Minnaar invited guests to contact Umthunzi Energy for tailored support with their Energy Performance Certification needs.
Refreshingly, Mihlali Gqada pulled few punches…and at speed. She was fresh off a flight after presenting at the National Transport Conference. Warwick Lord, the networking event MC, KZN SAPOA Vice Chairman and CEO of the Cato Ridge Inland Port, kept an eye on the clock, as she condensed a three hour talk into thirty minutes. She did a sterling job. Her mention of R144 billion for the reconstruction of the port of Durban got everybody’s attention…as well as the famed or infamous date when the N3 upgrade would be completed. She talked progress in terms of that all-important connectivity of road, rail and port, “We have progressed as a country, and it’s because of collaboration between the private sector and government.”
Gqada rolled out the Departments priorities around SA’s complex freight logistics industry, highlighting its importance to the economy and ongoing efforts to improve it. The goal is boost rail freight, improve port efficiency, increase passenger rail and air travel, grow airfreight, and cut road fatalities by 45% by 2029, all aligned with 2030 targets. Despite challenges, she remains optimistic.
Gqada talked directly to Durban delegates, keen to hear what was happening with the port: “The Durban port expansion is a R144 billion project over the next five years. The aim is to turn the harbour into an international container hub with a double capacity by 2031/32. We’ve lost the impetus of being the best port, not only in SA, but in Africa – we’ve lost to Morocco, Egypt…but because of the Middle East crisis, our location means we have the potential to regain lost ground. We need to deepen and widen the harbour entrance to handle large vessels, increase the capacity of Pier 2, and build a new dig out port at the old airport. But the most important thing is how we integrate the port system with rail and road. Spatial development around the port can’t inhibit everything else.
“Transport is an enabler, not a stand-alone industry. Transport enables other industries to function and perform. As property developers, it’s important to understand the geographic links, socio-economic impetus, as well as the broadening of the projected economic development within the city for you to be able to know this is where you can develop. Our cities are too small and clustered. We need to develop on the city outskirts and create economic activities to try to ‘tranship’ into the city. We are slowly moving to a stage where we will be locking trucks out of our cities. We can no longer afford the damage not only to infrastructure but the livelihood of people, accidents, pollution and more.
“With its well-developed network of ports and our transportation system, South Africa holds immense potential to become the gateway to the African market,” says Gqada, “but we face serious challenges in meeting the growing demand for freight movement, particularly rail. South Africa is now being undercut by numerous African countries. Bottom line, our road network is about 750 000km, rail about 30,000km. The inequitable rail/road split of around 88/12, is unsustainable.”
South Africa’s economic competitiveness is hampered by operational and infrastructure deficiencies in the road, rail and port sectors, compounded by the rampant vandalism which plagues the freight transport infrastructure – economic sabotage. The road transport sector now clearly dominates the freight movement, railway investment was beset by a serious backlog, and road infrastructure became significantly degraded through overuse and lack of upgrades.
A reduction of costs in SA logistics has to be prioritised. The global average for logistics costs is 7% of GDP – South Africa is at 14.7%, among the highest globally. The most recent Logistics Barometer Report by Stellenbosch University determined that SA’s logistics costs amounted to 11.2% of global GDP and 51.5% of the transportable GDP.
At the heart of the country’s logistics straits, lie structural, operational, financial and institutional crises. Structural, in terms of inadequate infrastructure, inefficient processes, and a lack of coordination between different modes of transport, which result in high transport costs, long delivery times, and unreliable supply chains. Operational – volumes transported on the rail network declined from 226 million tons (Mt) in 2017/18 to 149.5 Mt in 2022/23. Consequently, more than a quarter of long-distance freight traffic has shifted onto the road network in the past five years. Financial – SA has forfeited an estimated USD 26.7 billion in iron ore and coal export trade since 2010. Transnet recorded a R5.7 billion loss in 2022/23 driven primarily by the deteriorating performance of Transnet Freight Rail. And Institutional – the governance failures at State-Owned Companies (SOCs) have undermined the SA’s economic prosperity and competitiveness.
Gqada spelt out the investment into logistics infrastructure, with a few stand-out features such as removing the regulatory burden on business, and new reforms targeting infrastructure planning and implementation: R402 billion is set aside for transport and logistics, R93 billion for SANRAL for maintanance and rehabilitation of the national network, 24k km; 53.1 billion for the maintanance and refurbishment of provincial roads; R66.3 billion is allocated to PRASA, R18.2 billion for rolling stock fleet renewal programme; and R12.3 billion provisionally allocated for renewal of signalling. She added, “We need more revenue for the Budget Facilities for Infrastructure (BFI) and PRASA rollingstock fleet renewal programme.”
On the topic of Land Use, Spatial Development, and Transport, Gqada spoke to Cato Ridge: “The Department of Transport (DOT) is in the process of developing the Inland Port Strategy as a tool to ensure cohesive strategic interfaces between the three major transport modes. With its functional logistic supply chain eco-system, Cato Ridge inland depot is the case study, one which needs to be replicated countrywide. There are other depots throughout the country beginning to gain momentum, but the rail and port links are still a great challenge to their optimal functionality.”
“There are great opportunities to map, plan and develop in and around the cities where these depots are located, as these will be major economic hubs, with undeniable economic activities.
“The government has concessioned the rail system and has allowed 11 rail companies to operate on the rail network from March 2027 – there are greater opportunities to also invest in this for the private sector.
“It is Business Unusual, ripe for private sector involvement and investment, to ensure that spatial planning precedes transport planning and visa/versa where possible,” said Gqada.
And then the floor was open to delegates, and Gqada answered questions frankly and openly. To the question, “When is the N3/N2 upgrade project destined to be completed?”, she said the projection is 2030, but the minister wants it two years earlier, so 2028?
And to “What is the time projection for the old airport to become a dug-out port?” she estimated five to ten years in the long run.
Gqada had the final word: “The time to invest is now.”
