Share this
Twitter
Myspace
Mister Wong
Bookmarks.cc
Digg
Del.icio.us
Slashdot
Netscape
Furl
Yahoo
Technorati
Newsvine
Googlize this
Blinklist
Facebook
Wikio
Diggita
Hear this text
Export PDF
Print
E-mail
Tags
Strikes and rotten roads fingered as prime suspectsWhile Statistics South Africa has consistently reported solid increases since December last year in income from freight transportation, volumes of freight transported and payloads transported, road freight companies are loath to confirm a corresponding hike in their practical experience on the ground.
It seems a variety of factors might have been at play, in some instances causing temporary spikes in the tracking graphs producing these figures. This again raises questions about the effectiveness and validity of systems applied to measure freight transportation in South Africa.
As Frank Wagner, chief executive officer of Unitrans Supply Chain Solutions, says: “In the Road Freight Association, which we are members of, it’s a hell of a challenge to get accurate figures. Transporters are not very transparent, as they don’t want their competitors to see what they are doing. So I have sympathy for [Stats SA].”
Nonetheless, the figures released by Stats SA show that in December, income from freight transportation in South Africa increased by 7.7% year-on-year; in February, it increased by 10.9% year-on-year; and in April (the most recent figures just released), the figure stood at 9.8%.
In December, payloads for the year were still down 7.7% at 623.3 million tonnes, but the volume of freight transported in the month of December had increased by 0.7% year-on-year to 50.9 million tonnes; in February, freight volumes (payloads) had increased by 3.1% year-on-year; and in April, it had increased by 5.4% compared to a year ago.
In February, Stats SA reported that the main contributors to the increase were primary mining and quarrying products (35.0% and contributing 8.6 percentage points) and basic metals and fabricated metal products (41.2% and contributing 1.9 percentage points). In April, Stats SA again pointed out that the main drivers behind the increase were primary mining and quarrying products, increasing 34.4%; followed by basic metal and fabricated metal products (having dropped significantly to 26.0%) and non-metallic products (34.5%).
Francois van Rensburg, divisional director: Dedicated Transport Services at Barloworld Logistics Africa, seems to share Wagner’s caution: “It is typically difficult to relate these to the experience on the ground. The biggest impact on the growth for April is in the transportation of primary mining and quarrying products, which reflects the impact of China’s ongoing purchasing and growth.”
Officially, and judging by the freight transportation figures, the recession in South Africa is over. But is the road freight industry really emerging from the recession, and what are the prospects going forward?
“Certain sectors will take a while longer to shrug off the effect of the recession, especially building and construction. However, certain consumer goods volumes have remained surprisingly robust,” says Van Rensburg. “In the SADC [Southern African Development Community] region, mining activity has increased and transportation activity will be aligned to that.”
Wagner says that heavy truck sales and freight volumes plummeted in the period October 2008 to March 2009 and a “huge de-stocking exercise took place”. Since then, there have been various stimulus packages, but at the same time, there has again been a re-stocking exercise.
“So it’s a little difficult for us in the industry to determine how sustainable these volume growths have been,” he adds.
But Wagner believes the picture may also be skewered by short-term spikes in activity caused by, among others, the Transnet strike. The strike, he says, causes huge volumes of freight to be shifted to road transport, with the impact lasting well beyond the actual strike.
“For instance, we have the biggest oil tanker fleet in South Africa. When Transnet goes on strike and pipelines and rail are affected, all of that spills over onto road,” he says.
“Also, for example, when oil refineries shut down for refurbishment or whatever, we immediately experience big increase in tonnes-kilometres, with oil being bridged over longer distances than usual by road. That, too, causes a temporary boost in volumes.
“Recovery is very slow, if anything. For example, we do a lot of work for the cement companies in the construction industry and they are way down, with forecasts of even more decline being expected. There is a lull now in construction, as a lot of the big projects had a deadline to be completed by the time of the Soccer World Cup. And on the road-building side, all building activity has been suspended for the duration of the World Cup,” adds Wagner.
Serious concerns, however, remain over impediments to both recovery from the impact of the recession and further growth in the industry, the major one being the ongoing and rapid collapse of South Africa’s secondary road infrastructure.
“Road infrastructure is a big problem. It’s well published that South Africa’s secondary road infrastructure is falling apart. The latest figure is that 20% of the secondary road infrastructure is classified as bad or very bad,” says Wagner.
He believes that while there are too little funds available, a major part of the problem is that available funds are being wrongly prioritised.
Wagner points out additional problems, such as “shoddy maintenance being done on roads, which is a waste of money”.
And if new roads are going to be built or secondary roads rebuilt, these will become toll roads – that “will cost the road freight industry dearly”, he says.
“Already, South Africa’s logistics cost as a percentage of GDP [gross domestic product] at around 15% is among the highest in the world. That makes us very uncompetitive.”
Another problem that Wagner points out is the lack of policing on the roads. He says reducing the permissible axle mass loads on secondary roads – as has been threatened by the Department of Transport – will not solve anything, as people who overload their trucks will simply continue doing so.
Business Monitor International (BMI), a global research and forecast group with offices in South Africa, says in its Q2 2010 South African Freight Transport Report that it expects road haulage to grow virtually on a par with GDP – forecast at 3.3% annually over the next four years.
However, BMI cautions that poor road quality in some areas will be a restraining factor.
Furthermore, it questions the government’s ability to fund its planned R87-billion, five-year investment programme for infrastructure which is to focus on transport and utilities as it anticipates a fiscal deficit of 6% of GDP in 2010, following the 7.4% deficit of 2009.
BMI believes the total value of transport and communications GDP will rise to US$39.9bn in nominal terms by 2014, representing 8.2% of South Africa’s GDP.
Its analysts further believe that future GDP growth will be supported by South Africa’s plans to foster regional expansion in southern Africa, among others, which entails improving and extending the transport network.
Stef Terblanche
