‘Ports crises harmful’

TRANSNET: PROBLEMS HAVE FAR-REACHING NEGATIVE CONSEQUENCES

Peak export season for fruits ... and there’s still a backlog.

It is an irrefutable fact that Transnet experienced an operational implosion due to a litany of factors, including mismanagement and the Covid pandemic, although recent reports, as well as President Cyril Ramaphosa’s comments, suggest the entity is on the mend.

Economist Prof Waldo Krugell from the North-West University, says SA is wasting its export opportunities. “The logistics crises caused by Transnet and the ports have far-reaching negative consequences. Export industries are pleading for a chance to help, but government is unwilling to get out of the way.”

The state-owned enterprise is responsible for rail transport, port management and fuel pipelines. For the past few months especially, there were administrative chaos and shipping queues that spanned days.

“Some of the hallmarks of SA’s major ports, from Cape Town through the Eastern Cape to Durban, are backlogs and congestion that has seen tens of thousands of containers not reaching their destinations on time.”

The Port of Durban is not only one of the busiest harbours in Africa, but one of the busiest harbours in the world and it is not coping with its workload.

This has meant that cargo is diverted to Maputo, Luanda and Walvis Bay, resulting in SA losing invaluable commerce opportunities, Krugell says.

“The impact of the logistics crises... have far-reaching negative consequences. The rand is also undervalued and coupled with the Transnet dilemma, this has a compounding effect on the fortunes of the country.” Krugell adds that although the undervaluation of the rand is mainly due to trading financial assets and investors’ sentiment towards emerging markets, and SA in particular, it has an impact on the import and export of goods and services. According to the Big Mac Index, the rand should trade at around R11.30 per dollar, while more complex models reckon it should instead be around R15, he says. “Therefore, in rand terms, we pay more than we should for imported products.

“This is particularly detrimental when you consider that most of our fuel is imported and, also, many other industrial inputs.”

Fortunately, it also cuts the other way, he says. “Our exporters are R3 per dollar more viable than they would be at the fair value rate. That is an opportunity that we are wasting due to the logistics crisis caused by Transnet and the ports.”

It is peak export season for the fruit industry, and there is still a backlog of exports. During January, the situation at Cape Town’s container terminal improved slightly, with ships’ waiting times reduced from nine days to 7.5 days, but the target is actually only one day, Krugell says.

He says it is an untenable situation government placed itself in and a detrimental one for the health of a country that is still recovering from its Covid sickbed. –

Export industries pleading for chance to help