HomeNewsTransport sector is a vehicle for growth in SA’s economy, say experts

Transport sector is a vehicle for growth in SA’s economy, say experts

Mining trucks at workRoad and rail networks are the backbone of any economy, however, they are also one of the most important assets in terms of sheer monetary value. After decades of underinvestment in maintenance and development, South Africa is in a process of revitalising its transport networks that will see the country set itself up as a transport hub for Southern Africa.

Laying new foundations

According to Richard Matchett, Divisional Director at WSP, Civil and Structural Engineers Africa; “South Africa has some of the best road and rail networks around and, most certainly the most extensive road and rail network in Africa. However, the biggest current challenge for the country is the urgent need to upgrade the ageing rail infrastructure and to maintain the road infrastructure.”

De Buys Scott, Head of Infrastructure Advisory and Global Infrastructure Major Projects at KPMG says that; “To move forward, we need to focus on the positive developments and acknowledge that there has been significant traction and change to this in recent years. The National Development Plan (NDP), for instance, has been a great catalyst for changing mindsets and driving investment into more robust and enabling infrastructure for the country, where we have already seen significant traction in a number of Strategic Infrastructure Projects (SIPs), including in our transport networks.”

Some highly notable developments in rail include projects by Transnet that will upgrade South Africa’s ports, as well as the parastatal’s passenger fleet programme and Passenger Rail Agency of South Africa’s programme to expand and modernise their rail services in South Africa and the Gautrain. “In addition to these programmes, we have also seen investments in upgrading the country’s national and regional road networks to create a more geographically integrated economy,” adds Scott.

Staking a claim in international trade-transport

The transportation of Fast Moving Consumer Goods has experienced a significant growth of late in South Africa and Africa. In South Africa, for instance, imports of containers into Durban ports increased by 5% in 2013[1] where most of the imports into Gauteng are consumer goods[2]. While a fair amount of investment is being made by various stakeholders to upgrade the country’s rail networks so as to be sufficient to meet future demand, currently the transportation of goods and services is still largely reliant on road transport – and this bodes a massive opportunity for FMCG logistical and transport companies,” suggests Nicholas de Canha, CEO of Imperial Fleet Management.

“However, additional imposed costs, like increases in fuel prices and E-toll, can weigh heavily on any company running their own fleet of vehicles. On just E-tolls, for instance, a company running a fleet of around 30 trucks will see their operational costs increase by about R 30 000.00 a month – and I expect that we will see a lot more of these logistics and transport companies look to optimise their fleet operations.”

Setting up shop with a strategic view on the future

In recognition of the future growth opportunities for South Africa’s Transport sectors and with an aim to increase its commitment and investment in the South African economy, last month Hyundai Automotive South Africa (HASA) opened a semi knock-down (SKD) commercial vehicle assembly plant on the East Rand of Gauteng. Stanley Anderson, Marketing Manager of Hyundai Automotive SA, said: “The SKD assembly was driven by a long-term strategy to grow Hyundai’s share in the South African commercial vehicle market, to be more competitive and to increase Hyundai’s investment in the country’s economy and also ensure that we are able to meet the logistics and transport growth trajectory.”

For HASA, it is important to note that the company’s investment reaches beyond the monetary aspect. “Moreover, we wanted to make a sustainable contribution to both; the transport sector in developing critical skills and the economy, through creating job opportunities that will be viable in the long-term. We have already employed over 30 staff, with a vision of increasing this to around 60 people. By creating these initial 30 or so jobs, we are in turn directly improving the lives of more than 230 people.”

In review, there is no denying that the transportation network is the lifeblood of a country’s economy. Matchett concludes: “If you can’t move goods, services and people around, your economy stagnates. Having a long-term view when preparing budgets for new infrastructure or for upgrading existing transport networks is critically important.  That said, once this infrastructure is in place, it’s important to ensure it is well maintained – in fact, it’s cheaper to maintain infrastructure than to build new replacements. This is something that government must address effectively so as to better protect these assets in future.”

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