Results from a survey which the Chamber recently conducted on rail and port logistics inefficiencies, highlights the significant impact these inefficiencies are having on the growth and sustainability of Nelson Mandela Bay based businesses says Denise van Huyssteen, the chief executive of the Nelson Mandela Bay Business Chamber.

Rail needs to become fully functional again

Van Huyssteen says that the survey which covers the January to October 2023 period and incorporates feedback from the Bay’s largest exporters and importers, revealed that 88% of the businesses surveyed were not using the country’s rail network to transport their cargo due to its unreliability and unavailability.

The survey also reveals significant interest from 65% of the businesses who would use the country’s rail system if it was available and reliable, while half of the businesses indicated that they would use the north-south corridor if it was available. The corridor, which connects Nelson Mandela Bay and the province of Gauteng, with Johannesburg as the main destination of cargo, is particularly vital for the country’s automotive sector. These businesses however, are left with no alternative option but to use road freight to transport their cargo to market at significantly higher costs.

“Rail issues stem from the lack of infrastructure maintenance and investment particularly in the last two decades, and vandalism of the country’s railway system.  As a result, the country has seen a shift in general freight from rail to road, which has resulted in increasing road transportation costs, unprecedented damage to the roads and related infrastructure including increased road accidents involving trucks,” she says. “Also very concerning is that the unreliability of rail has resulted in manganese being transported via trucks and stored in the Markman industrial area prior to being transported to the harbour.  This has resulted in the roads, water and sanitation infrastructure in the area being decimated.”

Port inefficiencies need to be addressed

Over 75% of the respondents said that they had to transport their cargo to the Ports of Cape Town and Durban, due to shipping lines skipping the two Nelson Mandela Bay Ports. As a result, it has cost these companies an estimated R66 million to transport their cargo to and from the Ports of Durban and Cape Town during this period.

Equipment issues, especially the limited number of gangs available to work on vessels, were cited by 88% respondents as a key issue impacting upon the efficiencies of the two Bay ports, which affects turnaround times and cause delays.

“And the overwhelming majority the businesses surveyed said that urgent focus is required on developing port infrastructure to resolve the current challenges impacting business operations and the local economy,” says Van Huyssteen.  “This is particularly important if we are to retain and attract investments to the Metro, as 43% of the businesses indicated that these port inefficiencies have impacted current and future investments plans.”

Current Logistics Crisis

The Chamber has noted that for a number of months, prior to the current crisis and backlog at the Durban port, a number of the major shipping lines were already skipping the Nelson Mandela Bay ports. “This was because the shipping lines, having already lost too many days at the Durban and Cape Town ports, could not waste any further days at the Port Elizabeth and Ngqura ports.”

As part of mitigation efforts, to retain export business, some businesses in the Bay are currently transporting their goods via road to Walvis Bay and Maputo ports among others. Some businesses are even forced to use airfreight to transport their cargo and the additional logistics costs they are incurring are making the city’s exporters uncompetitive versus global competitors, who do not have to contend with these types of costs and delays.

Additionally a number of manufacturers have reported that due to delays in components arriving timeoulsy, this has caused production plants to lose critical production days. “For every day lost in the logistics chain, an entire production shift can be lost.”

“With freight carriers set to start charging a congestion surcharge due to difficult operating conditions at South African ports, this will have a trickledown effect where businesses will be forced to pass on rising prices to consumers, thereby pushing the price of goods,” says Van Huyssteen.

“For many years logistics has been among the highest costs for manufacturers operating in South Africa due to the distance to main markets.  In recent months these costs have escalated to unsustainable levels, and if you consider this alongside the additional costs manufacturers are paying for loadshedding mitigation solutions, the operating environment is not conducive to retaining and growing our local manufacturing sector. It is worth noting that a survey conducted by the Chamber indicated that load-shedding cost local businesses an estimated R2.9 billion in lost production and revenue in the third quarter of this year alone.

It is vital that all the stakeholders move with absolute urgency to develop and implement practical solutions to mitigate the risks posed by both the logistics and electricity crisis. As organised business, we are committed to continuing to engage and collaborate with Transnet to find solutions to address both the short-term emergency issues, as we all the longer-term issues.”

According to the World Bank’s 2022 global Container Port Performance Index (CPPI) that assessed and ranked 348 ports from the best to least performing port, South African ports are among poor performing ports with the Port of Port Elizabeth ranked higher at 291, followed by Ngqura at 338, Durban 341, and Cape Town at 344 out of 348 ports. Furthermore, at an African level, the port of Cape Town is ranked last at 37 out of 37 African ports, while the port of Durban

is one place up at 36 while the ports of Ngqura and Port Elizabeth are ranked 35 and 18th respectively.