Transnet crisis puts 60% of GDP at risk 

Transnet’s deteriorating infrastructure, from its ports to its railways, threatens the 60% of South African GDP generated from importing and exporting goods. 

This is according to the chief economist of the Minerals Council of South Africa, Henk Langenhoven, who spoke to Newzroom Afrika about the state of South Africa’s logistics infrastructure. 

Langenhoven said South Africa’s economy is peculiar in that it acts as a landlocked country with most of its GDP situated in the centre of the country in Gauteng. 

The production in Gauteng needs to be transported outwards to other provinces and the coast for export. This makes South Africa heavily reliant on rail infrastructure to transport goods efficiently. 

Langenhoven said 60% of South Africa’s GDP, worth R3.8 trillion, is generated from imports and exports, which makes it dependent on Transnet’s infrastructure at the country’s ports and its railways to transport it within the country.

In particular, the Durban-Johannesburg container corridor is vital to the economy. This corridor has been operating at only 30% so far this year, resulting in billions of rands lost. 

According to Langenhoven, South Africa spends roughly double on logistics than it does on electricity. 

The problem is compounded by the additional costs companies, particularly miners, pay to avoid Transnet’s rail infrastructure by using trucks to transport their goods. 

Many have turned to trucks to transport their produce to Maputo in Mozambique to avoid using Transnet’s rail infrastructure and delays at South African ports. 

However, this has a severe impact on the profitability of their operations. 

For example, transporting coal to Richards Bay via rail costs around $11 per ton, while trucking costs companies roughly $70 per ton.

Langenhoven said South Africa’s rail infrastructure has suffered from chronic underinvestment and has not grown in lock-step with increases in trade and economic production in the country. 

The last time a major railway was built in South Africa was in 1976 when the Saldanha-Sishen railway was completed. 

1999 was the last time South Africa’s port capacity was expanded, with Coega in the Eastern Cape established that year. 

South Africa’s economy is much larger and conducts far more trade than two decades ago. However, its logistical capacity has not increased. 

This has effectively capped the growth of South Africa’s economy. 

Transnet also faces other issues, such as a lack of spare parts to maintain its locomotives and near-constant vandalism of its railway lines. 

Langenhoven is positive, however, that changes are taking place at Transnet to tackle these issues and expand the country’s rail capacity. 

The Minerals Council has engaged with Transnet to this effect, and a new National Freight Rail Roadmap has been created to turn around the utility.