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‘Deep’ reforms, Transnet appointments key to dealing with South Africa’s logistics crisis – BLSA

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‘Deep’ reforms, Transnet appointments key to dealing with South Africa’s logistics crisis – BLSA

BLSA CEO Busisiwe Mavuso
BLSA CEO Busisiwe Mavuso

26th February 2024

By: Sabrina Jardim
Creamer Media Online Writer

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With commodity prices declining and mining companies being unable to get output to their markets owing to issues with the rail and port services that State-owned utility Transnet provides, business organisation Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso reiterates that stockpiles have been building up.

“The only option is to reduce production, which means there is excess workforce. The logistics crisis is a very serious challenge for the economy, and that is why business and government have pulled together with unprecedented speed to work on solutions.

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“Through Business for South Africa, we have partnered with government, mobilising resources to rapidly resolve the most pressing issues, while supporting wider reforms to improve the functioning of the system,” she says in her latest weekly newsletter.

In this vein, the National Logistics Crisis Committee (NLCC) – established in 2023 – thus has five workstreams in place to improve operations in rail, ports, roads, border crossings and security, with government leading three workstreams focusing on policy, regulation and legislative reforms.

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Mavuso explains that this process has seen a 45% reduction in vessels anchored outside Durban port, in KwaZulu-Natal, and a 36% reduction in the waiting time to anchor for container vessels.

Security patrols and other resources funded by business have helped to reduce incidents on rail and, consequently, the number of trains being cancelled.

Additionally, interventions at the Lebombo border post, in Mpumalanga, have resulted in an increase in vehicles processed from 1 600 to 1 900 a day.

“The short-term interventions can help reduce the negative impact, but the critical work is in resolving the long-term outlook for the sector. As we’ve learned with the electricity sector, it is only deep structural reforms that can sustainably shift the performance of the system.

“The good news is that the NLCC has already produced an excellent guide to the required changes in the Freight Logistics Roadmap and the Private Sector Participation framework that has been approved by Cabinet. This envisages a change from a monopolistic system almost entirely managed by Transnet to an open and competitive system with multiple operators.”

The NLCC was established as a coordinating mechanism with more than 45 private sector experts and CEOs with experience in rail, port and road.

Mavuso notes, however, that Transnet must have a board and executive team that are “in sync and accountable” in order to regain its role as an efficient and effective operator of rail and port infrastructure.

Moreover, she highlights that, while the R47-billion guarantee by the National Treasury ensures Transnet can meet its immediate obligations, it is critical that Transnet also deliver the reforms to enable the next step of its financial repair.

“The reform process has been quick in gathering resources and developing a plan. There have also been effective short-term interventions to improve performance. But that momentum is at risk if we don’t see strong appointments at Transnet who are empowered to drive reform in the utility under the direction of the board. I look forward to an announcement soon so that we can then get to work,” says Mavuso.

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