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CHAPTER 3
THE ROLE OF TRANSPORT IN THE SOUTH AFRICAN ECONOMY
3.1 INTRODUCTION
Chapter 2 focused on the role transportation plays in the USA’s GNP and in
the UK. The REDEFINE study conducted in European countries on the
relationship between economic activity and road freight transport was also
briefly discussed.
Some modal share splits from countries around the world were highlighted
and the conclusion was drawn that in many countries road transport
dominates the freight transport market, as is the case with the South African
situation. Brazil and Canada were used as international countries to compare
the South African transport environment to.
This chapter will focus on the important role of freight transportation in the
South African economy. Transportation’s contribution to South Africa’s Gross
Domestic Product (GDP) and employment creation in the sector is
investigated. Annual volumes and growth in land freight transport, obtained
from Statistics South Africa (SSA), are also discussed.
The chapter will also focus on the role of maritime, rail, pipelines and air
transport modes of transport and the role that these modes of transport play in
the South African economy.
3.2 THE RELATIONSHIP BETWEEN TRANSPORT AND THE REST OF THE
ECONOMIC SYSTEM
According to the Moving South Africa strategy (MSA), transport plays an
integral part in the economy of South Africa, whether directly or indirectly:
“Classic macroeconomic theory suggests that productive infrastructure,
including transport assets, is one of several key preconditions for national
44
economic growth. The theory holds that by investing in assets like bridges,
roads, ports, or even telephone lines, a nation can structure development by
reducing transport and communications costs, thereby facilitating further trade
and creation of wealth. Indeed, transport is generally seen as an engine of
growth and a guarantor of national integration, both internally and with the
external global economy” (Moving South Africa 1999).
Transport employs many people in South Africa and globally; it also accounts
for a substantial number of jobs in the national economy and has supplier
industries and customers of its own. It is an industry in and of itself.
However, for the purposes of the White Paper on National Transport Policy
and the MSA strategy, the Department of Transport adopted the view that
transport is best seen as an enabling industry, one which exists not only to
meet goals inherent to transport, but also to meet other pressing national and
social objectives. Examples of such non-transport objectives include (but are
not limited to):
• Economic growth, creating a high and rising standard of living for all
citizens as set out in Growth, Employment and Redistribution
Programme (GEAR) and the Reconstruction and Development
Programme (RDP),
• Increased trade, especially with neighbouring Southern African
Development Community (SADC) countries,
• Improved access to employment opportunities, or
• Increased social integration.
Transport, therefore, becomes a critical input for other industries and other
social objectives set outside of the transport context (White Paper On National
Transport Policy 1996).
Providing effective and efficient infrastructure underpins all attempts to reduce
poverty. Trade is the engine of economic growth, and reliable and efficient
transport is essential for successful trade. Transport is needed to facilitate
commercial exchanges and production: it enables farmers to bring their
products to the market and it provides the basis for private investment. The
45
poor state of transport infrastructure impedes Africa’s development and
obstructs poverty reduction (Watson, 1998).
A critical area of focus in South Africa is a seamless logistics system,
characterised by an efficient flow of freight, promoting the economy’s
competitiveness. Transport and logistics should be restructured to ensure that
logistic activities do not act as a restraint on economic growth, employment
and sustainable development. Removal of blockages within the ports and rail
systems are regarded as a priority. An integrated approach is therefore
required in order to use the transport system as a catalyst to stimulate new
development corridors in various regions of the nine provinces (South African
Government Information 2005).
South Africa’s cabinet also approved a five-year road-infrastructure strategy to
prevent the further deterioration of the country’s road network (South African
Government Information 2005).
The Business Report also highlights the importance of sustainable investment
in infrastructure: government is aiming to boost growth to 6% by 2010 and
plans to invest R372 billion in transport, power and housing infrastructure over
the next three years are in place (Seria, N., 2006).
Kevin Lings, a Stanlib economist, wrote the following on the topic: “it is clear
that in order to achieve sustained high growth, South Africa needs increased
infrastructural fixed investment and an increased base of manufacturing
activity” (Seria, N., 2006).
The Professional Society for Supply Chain Management (Sapics) has argued
that the advances made in supply chain management could dramatically
improve the country’s GDP and is targeting logistics, supply and planning.
These three elements must be considered in order to quantify the contribution
of supply chain management to the GDP. The society accentuates the fact
that improved supply chain management can enhance the industry by 10%,
which represents 3% of GDP, and the potential impacts would equal those of
46
the mining sector, automotive manufacturing and the transport sector
(Engineering News 2005).
Cosatu’s newsletter of May 2001 is dedicated to transport as the key to an
integrated economy and society. Jane Barrett, Satawu’s policy research
officer, notes that transport is the cement that integrates and binds production,
trade and consumption in any society. She further mentions that if transport is
available, affordable, safe, convenient and efficient, it can:
• Improve the movement of people, goods and information,
• Help create new investment opportunities
• Affect where people live and work
• Reduce economic polarities between rich and poor (Barret, J., 2001)
Yet the social and strategic significance of transport as an integrating factor is
often under-estimated (Barrett, J., 2001).
The transport, storage and communications sector made up one-tenth of
South Africa’s GDP in 1999, excluding the contribution of in-house and private
personal transport, as well as the entire taxi-industry. Should these activities
be included in the calculation, this sector’s contribution could be as high as
13%. The cost of transport adds to the price of all goods sold. In South Africa,
using 2001’s figures, it amounts to between 1% and 7% of the price of most
commodities (Barrett, J., 2001).
In the president’s State of the Nation Address of 2004, President Thabo Mbeki
committed the government to upgrading the transportation system over the
next five years. Priority would be given to increasing the capacity of the
railways by 30%, enlarging the ports and improving the commuter transport
situation (“Mbeki puts it all on the line” 2004).
South Africa’s transport system has long been a major bottleneck, which
contributes to driving up costs and constraining economic development. With
the industrial capital of South Africa in Gauteng (generating 65% of GDP),
rather than at the coast, as is the case with most developed countries, bulk
47
48
imports and exports are hauled between 600 km and 1400 km from and to the
ports (“Mbeki puts it all on the line” 2004).
The wasted time and costs have a ripple effect throughout the economy, while
diversion to heavy vehicles is crushing our roads. Addressing all these issues
has long been overdue (“Mbeki puts it all on the line” 2004).
The provision of transport infrastructure is the responsibility of the public
sector; therefore the government needs to be closely involved in the process
of infrastructure development and investment. Transport infrastructure
impacts both on users and non-users of the services. The merits of transport
proposals should therefore be judged by their potential impact on all affected
parties and not only on users of the systems and services (Joynt, H, 2004).
Transportation plays a multi-faceted role in the economic development of a
country or region. As can be concluded from Table 3.1, the contribution of the
transport and communications sector towards the annual GDP in percentage
is a substantial part of the total GDP, while the tonnages moved in South
Africa increase every year. Even though the transport, storage and
communication sector’s contribution to the GDP dropped slightly from 10% in
2000 to 9.9% in 2001, the gross value of the sector increased from
R80,799 million to R88,161 million. This implies an increase of over
R7,3 million.
49
Table 3 .1 The Contribution of the Transport and Communications Sector to the Gross Domestic Product (GDP) (million rand) Year
1993 1994 1995 1996 1997 1998 1999 2000 2001
At current prices
Gross value added
at basic prices
390,841
440,144
500,352
565,472
627,167
673,860
728,761
808,241
894,901
Transport and
communications
sector
33,972
38,296
44,538
51,787
57,874
63,278
70,868
80,799
88,161
Percentage (%) of
GDP
8.70
8.70
8.90
9.20
9.20
9.40
9.70
10.00
9.90
At constant 1995 prices
Gross value added
at basic prices
471,670
485,781
500,352
521,611
535,321
539,595
551,624
571,432
588,101,
Transport and
communications
sector
38,507
40,281
44,538
47,271
50,879
54,273
58,141
52,211
55,532
Source: Annual Transport Statistics 2002
The total volume of goods transported in South Africa increases every year.
Figure 3.1 illustrates the extent of the year-on-year growth of land freight
transport (road and rail tonnages). (Please note that the private sector
enterprises referred to in Figure 3.1 include only transport by road for reward.)
The total volume of goods transported during the year 2003 increased by
2.9% (19.5 million tons) compared to 2002. This increase was due to
increases of 3.3% (16 million tons) and 1.9% (3.4 million tons) reported by
private sector enterprises (road transport for a reward) and Transnet Ltd
respectively. Figure 3.1 The total volume of goods transported: 2003
Source: SSA (Land freight transport, December 2003)
These large amounts of volumes moved naturally have an influence on the
economy of the country. For example, an increase of over 6 million metric
tons over a period of three years, as discussed above, implies a greater
workforce, higher fuel consumption, more vehicles, etc.
The road freight industry makes an enormous contribution to the economy.
Around 870 million tons of cargo worth some R200 billion are moved every
year. The industry generates around R13 billion in revenue and approximately
70 000 people are employed in the industry with annual remuneration
50
estimated at R4.6 billion. Industry taxes amount to R1.1 billion and
contributions towards road funding are in the vicinity of R5.7 billion. During
2001, a total of 3 582 commercial vehicles over 16 tons were purchased at a
cost of about R3 billion. The industry consumes roughly 1 billion litres of fuel
per annum at a cost of R3.6 billion (Deysel, 2002:4).
3.3 EMPLOYMENT IN TRANSPORT
The transport industry in South Africa is a major source of job creation.
According to SSA the transport, storage and communication sector employs
314 000 people on a full-time basis in the sector, which equals around 4.5%
of the total workforce (SSA [Quarterly Employment Statistics, December 2004
and March 2005]). This figure is conservative when considering that sector 7
only includes road transport (for a reward) and rail transport. Many more
people are employed in road transport operations in support of general
economic activity, e.g. transport as a support function and without a profit
motive. The extent of this category of road transport was illustrated in Figure
2.2, where it was shown that in 1991 more than 50% of all freight tonnages
moved in South Africa by all modes of transport were moved by private road
transport operators (not for reward). Each one of these vehicles would require
drivers and support personnel such as on-vehicle staff, maintenance
personnel, technical support etc.
The official employment rates, as published by SSA, in the other sectors are
summarised in Table 3.2.
51
Table 3.2 Number of employees by industry: December 2004 Industry Number of employees Mining and quarrying Manufacturing Electricity, gas and water supply Construction Wholesale and retail trade: repair of motor vehicles, motor cycles and personal and household goods: hotels and restaurants Transport, storage and communication Financial intermediation, insurance, real estate and business services Community, social and personal services
456 000 1 179 000
42 000 373 000
1 387 000 314 000
1 550 000 1 774 000
TOTAL 7 075 000 Source: SSA. Quarterly Employment Statistics, December 2004 and March 2005
According to Census 2001 figures, a total of 442 730 people were employed
in the transport, storage and communication sector during 2000; this figure
equates to 4,6% of the total population (Census 2001).
The reason for the difference between the SSA 2004 (314 000) and Census
2001 (442 730) information is not evident, but can be related to the limited
database used by SSA when compiling its sector-specific statistics.
Table 3.3 discusses the total number of employees that were employed in the
transport industry among the different modes during 2002. The total
employees in land, water, air and supporting and auxiliary activities in large,
medium, small and micro enterprises totalled 226 939.
Table 3.3 Number of employees in the transport industry by enterprise size: 2002 Enterprise size
Land
transport
Water
transport
Air transport
Supporting and
auxiliary* activities
Total
Large
Medium
Small
Micro
Total
86 069
10 638
16 934
23 032
136 673
1 380
369
272
624
2 645
17 045
635
1 033
1 987
20 700
23 248
6 413
15 481
21 779
66 921
127 742
18 055
33 720
47 422
226 939
Source: SSA (The Transport Industry 2002, December 2004) *Supporting and auxiliary activities = cargo handling, storage and warehousing, other supporting transport activities, travel agency and related activities and activities of other transport agencies
52
The enterprises referred to in Table 3.2 are businesses entirely focused on
transporting freight and passengers for reward. In other words, private carriers
are excluded from this equation, even though these private enterprises may
well have a transport department, a complement of drivers and assistants etc.
When analysing employment figures for Transnet, one of the largest
employers in the transport industry, the following emerges: the number of
employees in Spoornet totalled 34 771 in 2004. The National Ports authority
(NPA) employed 3 544 employees in 2004 and the South African Port
Operations (SAPO) 5 464 employees in 2004. Petronet employed 568 people
and South African Airways (SAA), 12 556 people in 2004 (Transnet Annual
Report, 2003/2004). The total employment for Transnet (within the major
modes of transport) in 2004 is therefore 56 903. The figures are summarised
in Table 3.4.
Table 3.4 Transnet employees: 2004
Institution Number of employees in 2004
Spoornet
National Ports Authority
South African Ports Operations
Petronet
SAA
34 774
3 544
5 464
568
12 556
TOTAL 56 906
Source: Compiled for the purposes of this study from the Transnet Annual Report (2003/2004)
The importance and extent of employment in transport does not begin and
end with employment in the above industries: construction and maintenance
of infrastructure, and of roads in particular, can be a valuable source of
employment and income opportunities for the poor through income transfer (in
cash or in kind) and the enhanced employability of workers after construction
finishes, as the workers gain more skills and experience. The benefits for the
community are also great and include income multipliers generated by
spending of construction wages, and the creation of useful economic
53
infrastructure that can enhance market integration and reduce travel costs
and time for households (Social analysis in the transport sector n.d.).
3.4 SHIPPING
Maritime transport encompasses all forms of transport by sea, intermodal
links and inland ports but has certain fundamental differences from other
modes of transport. First, it caters almost entirely for the freight market, and
offers no significant passenger-carrying ability. Second, as it operates in an
international environment, it is subject to considerable competition and
economic pressure from foreign competitors (Moving South Africa 1999).
Unfortunately, South Africa has no commercially navigable rivers, but ocean
shipping has long been a feature of its transportation network, capitalizing on
the country's two-ocean frontage (South Africa road system and transport
1996).
With regard to the South African shipping environment, the National Ports
Authority (NPA), a division of Transnet, is the largest port authority in greater
southern Africa, controlling seven of the 16 largest ports in this region. These
are Richards Bay, Durban, East London, Port Elizabeth, Mossel Bay, Cape
Town and Saldanha (Transport n.d.).
South African Port Operations (SAPO) operates 13 cargo terminals across six
South African ports. Volumes handled during 2003/2004 increased to the
following:
• Containers: 2,5 million 20-foot equivalent containers, an increase of
6,6% compared to 2002/2003.
• Breakbulk: 13 million tons, which implies a decline of 2% for 2003/2004
compared to 2002/2003, mainly due to the move from breakbulk to
containerisation.
• Bulk: 43,6 million tons, an increase of 5,2% from 2002/2003. Over 28
million tons were handled at the bulk terminals in Saldanha.
54
• Vehicles: 232 000 units, an increase of 43,4% from 2002/2003 handled
at Durban, East London and Port Elizabeth (Transnet Annual Report,
2003/2004).
R385 million was invested in infrastructure and equipment to increase
capacity and service delivery, while R20 million was spent on enhancement of
technical expertise and technology (Transnet Annual Report, 2003/2004).
Each major port has traditionally played an important, specialised role in
South Africa's export sector. For example, Durban handles general cargo,
especially cereal exports; Cape Town specialises in exports of deciduous fruit,
wine, and vegetables; and Saldanha Bay was built specifically to export
mineral ores from the Northern Cape.
3.4.1 Port of Durban
Durban's port encompasses 893 hectares of bay area. The port entrance
channel is 12.7 meters deep at low tide. Durban has five deep-sea and two
coastal container berths, and provides 15,195 meters of quayage for
commercial ships. Durban also has repair facilities, including a floating dry
dock. Through the 1980s, Durban was South Africa's busiest general cargo
port, handling as much as 25 percent of the country's imports and exports in
some years, but it was surpassed by Richards Bay in the 1990s. The National
Ports Authority (NPA) was to spend R1,6 billion during 2005 in order to
increase the container capacity at Durban harbour. A project to provide world-
class car-handling facilities at the port has been completed and widening of
the port’s entrance channel has commenced (Transnet Annual Report, 2004).
3.4.2 Port of Richards Bay
Richards Bay, a deep-water port 193 kilometers northeast of Durban, was
commissioned in 1976 primarily to export coal from the eastern Transvaal, but
by the early 1990s it was handling almost half of all cargo tonnage passing
through South African ports. Port facilities can accommodate bulk carriers of
55
up to 250,000 tons, with five berths for general and bulk cargo, and a coal
berth (Transport n.d.).
3.4.3 Port of Cape Town
Cape Town has one of the largest dry docks in the southern hemisphere,
including five berths for container vessels and general cargo carriers, a pier
for coastal traffic, and extensive ship repair facilities. The port at Cape Town
has a water area of 112.7 hectares. Designs to increase the container
terminal capacity at the port of Cape Town are under way. The environmental
impact analysis has been completed and the National Ports Authority (NPA) is
awaiting the decision from the environmental authorities (Transport n.d.).
3.4.4 Port of Port Elizabeth
Port Elizabeth's enclosed water area of about 115 hectares has more than
3,400 meters of quayage for commercial shipping and a container terminal
that has two berths. Vessels with a draught of up to twelve meters can use the
harbour, and offshore anchorage is available for vessels of any draught.
Facilities at Port Elizabeth include a mechanical ore-handling plant, which can
process up to 1,500 tons per hour, and a pre-cooling storage area with a
capacity of 7,500 cubic meters (Transport n.d.).
3.4.5 Port of Saldanha Bay
Saldanha Bay, 110 kilometers northwest of Cape Town, is the largest port on
the west coast of Africa and one of the best natural ports in the world. The
facilities at Saldanha Bay provide anchorage in the lee of a breakwater where
the minimum water depth is 14.6 meters. With a port area of about 5,000
hectares, Saldanha Bay is larger than the combined areas of the ports of
Durban, Cape Town, Port Elizabeth, and East London. The ore-loading jetty
can handle carriers of 350,000 tons (Transport n.d.).
56
3.4.6 Port of Ngqura
The port of Ngqura, currently (June 2003) under construction 20 km northeast
of the port of Port Elizabeth, is South Africa's eighth and latest commercial
port development, and will be situated at the mouth of the Coega River in
Algoa Bay. The National Ports Authority of SA is responsible for developing
the deepwater port.
Industrial Development Zone, known as the Coega IDZ, is currently under
development over the 12,000-hectare site in the area including the river and
port, with a 4,500-hectare core development immediately identified. The IDZ
will serve as a primary location for new industrial development for export-
driven industries (The port of Coega 2003).
3.4.7 Port of East London
South Africa's only river port, East London, is situated at the estuary of the
Buffalo River in the Eastern Cape Province. Although East London is the
smallest of the six major ports, it has a 75,000 ton capacity grain elevator –
the largest in South Africa. East London handles agricultural exports and is
the main outlet for copper exports from other African countries, such as
Zambia and the Congo (Transport n.d.).
Two other coastal cities – Simonstown, south of Cape Town, and Mossel Bay,
between Cape Town and Port Elizabeth – have substantial port facilities.
Mossel Bay is a commercial fishing harbour between Cape Town and Port
Elizabeth, and Simonstown is a naval base and training centre (Transport
n.d.).
3.4.8 Annual maritime volumes
Annual coastal volumes with freight having an origin and a destination at
South African ports are depicted in Table 3.5 (Information provided by the
NPA (NPA: N Walters 2006, pers. comm., January 13)). The total number of
twenty-foot-equivalent (TEU) containers shipped by South African ports which
57
were destined for other South African ports are shown in column 2. The
assumption is made that each container weighs around 16 tons (norm used
by SAPO). After the TEU figure was added to the bulk and breakbulk cargo
handled by each port, the total volumes handled by each port were calculated.
The column marked “total” indicates the total volumes in metric tons handled
by each port for the year 2004. Table 3.5 Annual coastal volumes1 by port: 2004
Port Full Twenty foot equivalent units
(TEU) (total containers
shipped – originating and terminating on
SA shores)
Assumption by SAPO2
Mass of 16 tons per container (metric tons)
Breakbulk and Bulk Cargo Total cargo
handled (metric tons)
Total
Richards Bay
Durban
East London
Port Elizabeth
Mossel Bay
Cape Town
Saldanha
-
16 804
95
570
-
6 465
-
-
268 864
1 520
9 120
-
103 440
-
323 384
573 784
918 463
886 973
32 457
1 018 725
397 581
323 384
842 648
919 983
896 093
32 457
1 122 165
397 581
TOTAL 23 934 382 944 4 151 367 4 534 311
Source: Compiled for the purposes of this study from NPA personal communication
The total volume of cargo handled by South African ports for the year 2004
was 4 534 311 metric tons. The 1991 volumes, as depicted in the RAU report,
indicated that coastal tonnages were around 463 428 tons (RTPS p.D.9),
while the coastal volumes for 1986 were 1 351 022 tons (Louw p. 208).
3.5 AIR TRANSPORT
Air transport’s impact on Africa is significant. It generates about 470 000 direct
and indirect jobs across Africa, contributing over US$11.3 billion to the African
1 Coastal volumes refer to all maritime cargo originating and terminating on South African shores 2 South African Port Operations (SAPO) assumes an average mass of 16 tons per container
58
GDP. African airlines directly employ over 82 000 people. These airlines
contribute roughly US$7.5 billion to African GDP, the airports in Africa
contribute just over US$2 billion and aerospace just over US$1.5 billion
(Opening Address by the Minister Jeff Radebe at the Aviation Safety Seminar
2006).
The Airports Company South Africa (ACSA) is the largest airports authority in
Africa and owns and operates South Africa's nine principal airports, including
the three major international airports at Johannesburg, Cape Town and
Durban. The other six domestic airports are situated in Bloemfontein, Port
Elizabeth, East London, George, Kimberley and Upington. The Company has
a 35-year concession to operate Pilanesberg International Airport near Sun
City in the North-West Province.
Together, the 10 airports handle more than 200 000 aircraft landings and
10 million departing passengers annually (ACSA n.d.).
During 2003 ACSA airports handled 23 683 international aircraft landings,
with a total of 3 430 664 passengers. Domestic landings accounted for 122
105 movements with a passenger total of 8 074 116 people. Regional aircraft
landings totalled 11 060, representing 343 168 passengers. The number of
non-scheduled aircraft landings were 56 087, with 52 071 passengers. ACSA
airports host 39 international airlines and seven domestic airlines (ACSA
Annual Report 2003/2004).
Apart from providing secure infrastructure for airlines to move people and
goods around, ACSA is proactive in the promotion of tourism and facilitation
of economic growth, job-creation as well as protection of the environment.
In line with the New Partnership for Africa's Development (NEPAD), ACSA
has also invested enormous time and effort in finding opportunities to assist
and invest in airport development in other African countries (ACSA n.d.).
The annual domestic airfreight volumes for South Africa are calculated to be
roughly 33 443 kg (ACSA: Total freight and mail. Calendar year 2004.
59
Domestic volumes only). The Rand Afrikaans University’s RTPS report of
1993 reported air transport tonnages of 167 664 tons during 1991 (RTPS p.
D.9). This figure probably included international airfreight, as the present
volume of international airfreight, according to ACSA, is about 300 000 tons.
3.6 RAIL FREIGHT
Spoornet is the largest division of Transnet. It is made up of six businesses,
namely:
• GFB Commercial
• COALlink
• Orex
• Luxrail (passenger transport)
• Shosholoza Meyl (passenger transport)
• Spoornet International Joint Ventures
The passenger services will not be discussed, as this study’s focus is on
freight movement.
Spoornet maintains an extensive rail network across South Africa and this
connects with other rail networks in the sub-Saharan region. Its rail
infrastructure represents about 80% of Africa's total. Spoornet is active in
some 17 African countries (Transnet Annual Report, 2003/2004).
The 2003/2004 Transnet Annual Report reported that the volumes railed by
Spoornet during this period totalled 83 million tons against a budget of 84
million tons. The coal line railed 66 million tons and the iron ore line railed 27
million tons (5,9 % more than the volumes railed in 2003), with a record
weekly tonnage of 585 000 tons (Transnet Annual Report, 2003/2004). The
83 million tons referred to above will be used in further freight calculations, as
the coal and iron ore are moved by dedicated lines and no other viable
alternative exists for these purposes. Therefore, 83 million tons will be
accepted as the annual tonnages of general freight transported by Spoornet
during 2004.
60
During 1991, Spoornet transported a total of 153 806 101 tons, of which
90 880 4643 tons were general freight (excluding coal and iron ore) (RTPS,
p.D.9). Louw reported tonnages of 131 295 008 for 1986, including coal and
iron ore (Louw p. 208).
3.6.1 GFB Commercial
GFB Commercial is the largest of Spoonet's business units and was
previously known as General Freight Business. GFB is responsible for roughly
70% of Spoornet’s income (Transnet Annual Report, 2003/2004).
GFB Commercial manages the flow of material and information between
suppliers and customers along sections of their supply chains. It strives to
integrate the rail component of the supply chain with adjoining components in
order to increase supply chain efficiency and reliability at the lowest possible
cost.
3.6.2 COALlink
Coal is a vital export commodity and generates billions of rands in foreign
exchange earnings for South Africa. COALlink is a specialist business unit
that provides world-class transport for South Africa's export coal from the
Mpumalanga coalfields to the Richards Bay coal terminal. It is one of the
world's most efficient bulk export logistic supply chains, and its steam-coal
export tonnage is second only to Australia's (Transnet Annual Report,
2003/2004).
3.6.3 Orex
Orex is a Spoornet specialist business unit dealing with the transport of iron
ore over the 861 km railway line from Sishen to the port of Saldanha.
Following the high demand for ore in the export markets, improvements to the
3 This figure excludes the iron ore and coal transported by Spoornet during 1991. Total for Spoornet for 1991 was: 153 806 101 minus 17 125 637 (iron ore) minus 45 800 000 (coal) (Spoornet: F Callard 2006, pers. comm., March 8).
61
line implemented since 1998 have resulted in the capacity of the Orex line
being increased from 18 million tons a year to more than 22 million tons a
year. Further expansions are now in the pipeline.
Rated in a recent benchmark study as 38% better than the next best-practice
operator in its field, Orex is already achieving both its vision and its mission to
be an international leader in providing world-class heavy-haul logistics
solutions for a growing market (Transnet Annual Report, 2003/2004).
3.6.4 Spoornet international joint ventures
Through its railway operations, Spoornet aims to become a significant global
player in the provision of freight logistics solutions to its customers on the
African continent and beyond. The International Joint Ventures (IJV) business
is Spoornet's vehicle for achieving this (Detail of division: Spoornet n.d.).
3.7 PIPELINE TRANSPORT
Petronet is responsible for the transportation of liquid fuels: petrol, diesel, jet
fuel, crude oil and gas (methane-rich gas). The total product throughput is
about 16 billion litres per annum, with gas throughput representing 334 million
cubic metres per annum. When the fluid volumes are converted into tonnage
for the purposes of the calculation of the South African modal split, the
tonnages moved by Petronet amount to roughly 14 million tons (Petronet: R
O’Hare 2005, pers. comm., October 5). The RTPS study of 1993, found that
pipelines transported around 1 million tons during 1991 (RTPS p.D.9).
In his 1986 study Louw reported that pipeline tonnages under the heading of
“Other” transport amounted to 578 891 (Louw p. 208), indicating a large
growth in the pipeline tonnage transported between 1986 and 2005.
3.8 CONCLUSION
In this chapter the importance of and the role transportation plays in the South
African economy were discussed.
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A modal split for the South African economy can be compiled at this stage,
based on current available statistics and tonnages. The results are depicted in
Table 3.6. Table 3.6 South African modal split: 2004
Mode Actual tonnages
Road4 504 674 000
Rail5
Air6
Coastal7
Pipeline8
83 000 000 33 443
4 534 311 14 029 000 TOTAL 606 270 754
Source: Compiled for the purposes of this study The modal split, as depicted in Table 3.6, is graphically illustrated in Figure
3.2. Figure 3.2 Preliminary South African modal split: 2004
Road83%
Rail14%
Air0%
Coastal1%
Pipeline2%
Source: Compiled for the purposes of this study
4 SSA. Land freight transport. December 2003. The latest figure available from SSA is for 2003. 5 Transnet Annual Report 2003/2004. Iron ore (27 million tons) and coal (66 million tons) are subtracted from the total Spoornet tonnages of 176 million tons as these tonnages are captive to rail and modal choice is not a factor. 6 ACSA: Total freight and mail. Calendar year 2004. Domestic volumes only. 7 NPA: N Walters 2006, pers. comm., January 20. 8 Petronet: R O’Hare 2005, pers. comm., October 5. Petronet confirmed this figure as correct. Petronet has significantly increased its usage since 1991.
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From Table 3.6 above as well as the graphic depiction (Figure 3.2) it can be
seen that road transport represents 83% of all freight tons moved in the
country, followed by rail (14%) and pipelines, representing 2% of all freight
tonnages.
The South African modal split, and especially the road transport component
thereof, as depicted above is based upon SSA information reported in 2003.
As has been mentioned previously in this study, this split will in all likelihood
change with the inclusion of the private carriers.
In summary, the important role the transport industry plays in creating
employment and job opportunities was briefly discussed in this chapter.
According to Census 2001 figures, a total of 442 730 people are employed in
the transport, storage and communication sector. This figure equates to 4,6%
of the total population, but is significantly higher when taken as a proportion of
the economically active population.
Maritime freight transport, airfreight, rail freight and pipeline movements were
discussed and an indication was given of the volumes moved by each of
these industries on an annual basis.
In Chapter 4, the research methodology followed to determine the South
African road freight tonnages will be discussed in detail. The classification of
the South African economy is outlined and the different sampling methods
briefly outlined. The sampling method followed in the study and the number of
questionnaires sent out to every economic sector are discussed.
An analysis of the questionnaires is undertaken and the South African modal
tonnage split for 2004 is calculated from the information gathered.
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