by Mwangi Githahu

Transport Month

Infrastructure drive to boost the economy

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Situated, as it is, on one of the world’s busiest international sea routes, South Africa’s ports and terminals are critical to international maritime transportation and, as such, are key engines for the country’s economic growth
The South African Government has embarked on a massive infrastructure drive to boost the economy, create jobs and alleviate poverty. In this drive, the ports are seen as key engines for economic growth and Transnet’s Market Demand Strategy (MDS) will see the company invest R300 billion on port and rail capital projects over the next seven years. The MDS is largely aimed at building freight capacity to support South Africa’s economic growth and position South Africa as a regional transhipment hub for sub-Saharan Africa.

The efficiency and effectiveness of a port and port terminals are critical to success. Nozipho Sithole, Transnet Port Terminals’ (TPT) first female Chief Executive says: “At Transnet Port Terminals, we can talk first-hand about the opportunities. As the operator of many of the busiest and most modern ports on the continent, we are already active in the market.”

TPT is a division of Transnet SOC Limited; South Africa’s state-owned freight transport company, which owns and operates 16 terminal operations situated across seven South African ports. Operations are divided into major market sectors, namely containers, bulk, break bulk and automotive and organised into three geographical regions—the Eastern Cape, Western Cape and KwaZulu-Natal.

As African countries grow and develop, the continent’s ports, and, particularly South Africa’s, are being seen as essential for sustaining and improving more robust and diverse growth to African economies through the import and export of manufactured goods and other products. Due to the fact that countries in sub-Saharan Africa trade very little with each other, a large proportion of trade is seaborne rather than along overland connections. Although the development of intraregional trade is important, port infrastructure will remain essential for the development of trade to the rest of the world.

Sithole started her career as a Lawyer, working for Webber Wentzel, where she also worked as a Conveyancer and Notary Public, before joining Transnet in 1994 as a Legal Adviser. She moved to Transnet National Ports Authority (TNPA) as the Port Manager for the Port of Durban in 2000, where her mandate was to ensure the port provided marine services to customers in line with best practice.

Sithole took over as TNPA’s General Manager: Operations with oversight of TNPA’s eight ports in 2004, before joining Transnet Freight Rail (TFR) as the General Manager of the operating division’s National Command Centre (NCC), which makes critical operational and maintenance decisions. She became the General Manager of TFR’s iron ore and manganese business unit in 2014, where she was on the team that developed a detailed standard operating procedure for train planning and movement and was appointed Chief Executive at TPT in July 2017. Sithole has been a member of the Institute of Directors since August 2013.

Previously, Sithole said her main aim is to ensure top customer service for port users who benchmark port services against the international standards of ports such as Singapore and Rotterdam. “We aim to achieve best practice and for us to be among the top five port systems across the globe. Customer service is a top priority,” she said. “Digitisation and the Fourth Industrial Revolution are something we will also use to improve our services and planning, the space in the port and the relationship with customers, suppliers and other stakeholders like business chambers,” Sithole said.

Contributing positively to the communities around the port to reduce poverty and crime and to contribute to transformation is also important to Sithole, while women’s empowerment is especially close to her heart.

With regard to intra-African trade, Sithole said in a recent opinion piece she penned, “Our goal of partnering with terminal operators elsewhere in Africa is based on research and first-hand experience of working on the continent and seeing the potential.”

Sithole added, “We see partnership opportunities in countries such as Senegal, Liberia, Nigeria, Ghana, Togo, Benin, the Democratic Republic of Congo and Kenya as well as our Southern African Development Community neighbours.

“Considerable investment is being made in most of the major port gateways on the continent. The next challenge is linking the ports to the hinterlands they serve, which includes what are now known as the 16 “land-linked” (previously landlocked) countries.”

Sithole believes that while, for now, South Africa remains one of the three major gateways to the African market—with sound infrastructure, logistics, banking, manufacturing capabilities, education and legal structures—it is no reason to sit back and relax.

She said, “As with all competitive advantages, this can and probably will change, which is a good thing. Stronger economies to our north will open up new two-way trade opportunities. South Africa can—and should—be helping African countries to unlock the potential of their own markets.”

In Sithole’s view, South Africa “is in a strong position to be a conduit for inward investment and the opening up of global markets for goods made in Africa”. She said the country’s recent hosting of the BRICS summit in Johannesburg shows that South Africa is recognised as a facilitator of growing two-way trade between other African countries and its BRICS partners Brazil, Russia, India and China.

She added, “From my meetings with a large number of South African business leaders, I know they are very willing to be part of Africa’s drive for economic renewal—and they are putting their money where their mouths are.”

Meanwhile, as Africa has risen to prominence as an investment destination over the past few years, so has the role of transportation and logistics taken on a greater significance. Whether moving resources off the continent or bringing goods and services into its burgeoning economies, Africa’s future growth and development will depend on the quality of its infrastructure and the efficiency of its transport networks.

However, despite its enormous size, Africa still represents only a small portion of world trade, however, China’s One Belt, One Road initiative to build trade and transport links across Asia and Africa is likely to accelerate infrastructure spending throughout the region. While South Africa tops the list for having the most developed transport and logistics sector in sub-Saharan Africa, placing it on a par with some of the world’s industrialised countries, logistics companies are looking to the rest of Africa for investment opportunities.

Africa could soon be the largest free-trade area in the world. This is if the African Union’s African Continental Free Trade Area (AfCFTA) stays on track to be operational by the end of this year. Once up and running, the continent-wide free trade zone could lead to a 52% (US$35 billion) increase in intra-African trade within the next five years, according to the United Nations Economic Commission for Africa (UNECA). South Africa’s recent signing of the AfCFTA agreement paves the way for the country to benefit from inter-regional trade within the African continent.

Keep trucking

Volvo Trucks are among the top-selling trucks in South Africa, which is the 20th largest market for Volvo Trucks globally, and recently saw an introduction of Active Safety features last year, in the form of a R6.5-million investment into its Durban SKD manufacturing plant, which allowed the facility to install and calibrate the Volvo Active Safety Package features that were previously not available to this market.

Asked how they were positioning themselves to take advantage of the predicted increase in the cross-border haulage business, Marcus Hörberg, the newly-appointed Vice-President of Volvo Group said, “We sell and service professional heavy-duty vehicles in more than 130 countries, which makes us the only truck brand that is proven to withstand and deliver across all climates and relevant working conditions all over the world. Our goal is clear, to be the world’s most preferred truck brand.

“The future looks bright, and we are planning for it. I am happy to announce that we will be opening a new Durban truck centre in 2019, with an investment of R146 million in a new state-of-the-art dealership to better service our customers in the region.”

They are counting on the high demand for the FH series, specifically the Volvo FH440 6x4 Truck.

In 2017, it was the single-most heavy-duty truck sold in South Africa alone, according to the National Association of Automobile Manufacturers of South Africa (Naamsa). Above and beyond the 25-year anniversary of the iconic Volvo FH series, Volvo Trucks is celebrating its 90th year anniversary.

Volvo Trucks will enhance its efforts in contributing to the South African market through youth employment and apprenticeship programmes; education programmes such as the Star for Life and New Driver Training programme and Traffic safety initiatives in the form of Stop Look and Wave, driver academies and product feature training.

“At Volvo, we are 100% committed to doing our part to support sustainable development. What’s more, we have a clear, positive vision of the future—and we’re working hard to make it happen. It’s about the legacy that we leave behind. I am a strong believer in value-driven organisations with a conviction to social responsibility, which ultimately contributes to improving societies in emerging markets,” Hörberg said.

Meanwhile, in July, Mercedes-Benz announced a R10-billion investment in the expansion of its East London plant. Addressing delegates at the plant during the official announcement, President Cyril Ramaphosa said the cash injection signalled a positive momentum with regard to the target to raise R1.2-trillion in new investments. The President said, ”This investment is a statement of trust, a statement of confidence that South Africa is indeed a good investment destination and we welcome you for having brought this investment here.”

Markus Schafer, a member of Mercedes-Benz’s divisional board responded, saying, ”This is an important milestone for Mercedes-Benz, especially for Mercedes-Benz South Africa today, and I think it’s a very important milestone for the community, expanding the plant and making the plant ready for the future.”

Earlier the year, clearly with an eye on the logistics and long-haul markets, Daimler announced that it was taking the latest generation of its Mercedes-Benz trucks, in the form of the Actros and Arocs, to more than 40 markets in the Middle East and Africa after years of continuing to sell older generation models. The decision is also partly based on the forecast of economic growth of 2% to 5% in the coming years in the Middle East, North Africa and sub-Saharan Africa.

”Our Mercedes-Benz Actros and Arocs have proved they can be relied on. A truck has to help a customer do the best job possible. And that is as true in the Middle East and Africa regions as anywhere.

“We are now taking our latest Actros and Arocs models to the markets there, with the aim of leveraging the momentum being experienced across these regions,” concluded Stefan Buchner, the Head of Mercedes-Benz Trucks.

Mwangi Githahu

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