THE NATIONAL FREIGHT LOGISTICS SYSTEM Department of Transport 02 June 2004

1. Department of Transport THE NATIONAL FREIGHT LOGISTICS SYSTEM Department of Transport 02 June 2004

2. Presentation Overview • Overview of freight transport infrastructure • Strategic Corridors • Overarching Strategic challenges • Transport Mode review • Rail • Ports • Road • Border posts • Government strategic initiatives

3. Infrastructure Overview

4. 2020 Traffic Volume (millions of tons (1997 Volume)(2003 Volume) Up to 5 6-15 16-30 >30 = 30 Strategic Corridors Department of Transport Beitbridge 12 7 25 9 Maputo Gauteng Windhoek 97 62 57 31 Richards Bay116(74)(80,3) Sishen 158 3921 Durban 39 (21) (36,4) 6 3 9 5 Saldanha38(21)(30,9) East London2(1) (1,3) Cape Town6(3) (6,2) Port Elizabeth5(3)(4,2) (Source: MSA 1999, NPA 2004 )

5. Strategic Corridors (2) Areas requiring infrastructure investment immediately

6. Overarching Strategic Challenges • Geographic position • Infrastructure backlogs • A lack of service predictability • High costs • Bottlenecks • Institutional reform issues • A lack of an integrated national freight transport policy

7. Immediate operational, infrastructural and financial bottlenecks in freight logistics system Rail Road Ports Border Posts 3PL & 4PL • Inadequate security • provided by private • security companies • Lack of appropriately • trained and • experienced staff • Level of inter-dept • integration, including • IT, is low • Poor service • levels to non- bulk • customers • Lack of reliable • service • Price increases • Operations world • class but • hindered by lack • of efficiency in • transport system • Competition and • over-trading leads • to enhanced • negative • externalities • Poor service • levels and turn- • around times at • container • terminals Operational • Infrastructure • investment short- • falls on main • corridors, • particularly for • general freight • Shortage of • reliable rolling • stock • Shortage of • cargo handling • equipment at • container terminals, • particularly at • Durban • Capacity restrictions • at ports, particularly • at Durban and Cape • Town • Investment shortfalls • at Oshoek, • Kopfontein and • Lebombo • Customs search, • warehouse capacity • and staff accomm • require attention • Where assets are • owned they tend • to have similar • problems to road • freight sector • Specific • provincial roads • which are under- • maintained and • over-utilised Assets • Revenue streams • strong, no • immediate • financial • constraint • Government • budgeting for • border posts, • particularly that • of Dept of Public • Works requires • attention • Highly competitive • private sector • players who • require • government • investment in • transport assets to • attain world class • service • Highly • competitive • market, • significant over- • trading by • smaller contract • hauliers, leading • to further negative • externalities • Revenue • streams weak • in the context • of required • investment • in assets Financial

8. High Density 9874 km > 2m GTK/km Light Density 5221 km <2 m GTK/km No Service Lines 2432 km Low Density 2478 km Infrequent service Rail Network Zimbabwe Messina Mozambique Botswana Pretoria Komatipoort Mafikeng Johannesburg Namibia Sishen Kimberley Bloemfontein Richards Bay Durban Saldanha East London Cape Town Port Elizabeth

9. Rail: Resources

10. Strategic challenges faced by rail Economic - Asset condition Customer / Stakeholder Average age of locomotives above best practice Customers report rail operations to be significantly below expectations q 25 yrs • Five most important issues faced • by Spoornet customers: • Reliability • Equipment availability • Price structure • State and reliability of rolling stock • Rolling stock availability 16 yrs Years International best practice average Spoornet Operations Human Resource / Social Opportunities exist for productivity and efficiency improvements • The cost of labour as a percentage of operating cost is significantly above international best practice and reflects the high number of employees within Spoornet • The skills levels of Spoornet’s workforce is poor in a context where railways are becoming less labour intensive and more skills intensive 53% 50% Productivity improvement (percentage) CSX potential improvement in container supply chain Masimbambane actual improvement in coal supply chain

11. Port Network

12. Strategic challenges faced by ports Financial / Economic Customer / Stakeholder Even if SAPO is concessioned the capex burden will still remain with Government since the major capex is for NPA Not enacting the NPA Bill has created a gap disallowing the ports sector to respond to the needs of the market q • Five most important customer attributes: • Speed of service / no delays • Equipment availability • Reliability • Communication • Consistency of service Operations Human Resource / Social The ports sector is severely lacking in port operations management expertise to raise the levels of performance to meet customer needs. The inefficiency of the container terminals is strangling the SA Economy • Port Operations require a knowledge intensive logistics management capability: Private sector should inject • Best Practice and knowledge capital • Hands on terminal management expertise • Training and development

13. L i m p o p o P r o v i n c e # G a u t e n g M p u m a l a n g a # Y # # B e n o n i S o w e t o # # Y # # N o r t h W e s t S w a z i l a n d # # # # F r e e S t a t e K w a z u l u N a t a l # # Y L e s o t h o # Y # Y e T h i k w e n i N o r t h e r n C a p e U m t # W e s t e r n C a p e B i s h o # E a s t e r n C a p e # # # # Y # # Y Road Network Freight flow volumes per annum Sector: All sectors Sub-sector: All commodities – Only 4 sectors Mode: Road (Tons) 109497 LEGEND: (Tonnage per annum) P i e t e r s b u r g 115741 10000 - 50 000 50 000 – 100 000 32070 272174 100 000 – 500 000 287417 500 000 – 1 000 000 137379 > 1 000 000 120081 P r e t o r i a W i t b a n k M a f i k e n g 8938 Total Road Volumes* 132288 P o t c h e f s t r o o m V e r e e n i g i n g Road Flows per annum V a n d e r b i j l p a r k 911802 101184 797806 W e l k o m K i m b e r l e y 31187 B l o e m f o n t e i n P i e t e r m a r i t z b u r g 827413 694440 44790 648380 128027 29430 a t a 366644 70418 M d a n t s a n e E a s t L o n d o n 323944 U i t e n h a g e C a p e T o w n 75177 P o r t E l i z a b e t h 30424 * Volumes less than 10000 tons not shown

14. Road network with a high heavy vehicle impact Source : Bosman 2004

15. Human Resource / Social Customer / Stakeholder Road Infrastructure Financial / Economic Strategic challenges faced by road Declining real road freight prices Customers have high expectations of road freight providers often because they are managing complex supply chains • Six most important issues faced by road freight customers*: • Customer service • Order fulfillment • Fleet reliability • Inventory management • Warehousing • Transport costs * preliminary estimate Road condition assessment • The prevalence of HIV by drivers of long distance trucks has reached alarming proportions (estimated to be as high as 50% in SMME sector) • Drivers work longer hours than stipulated leading to fatigue and increased accidents • Lack of practical enforcement measures and insufficient rest areas to comply with safe driver hours • Highjack and related criminal activities increase overhead costs and impact negatively on driver moral

16. Border Posts Land Borders 23 22 24 25 21 1.Alexander Bay 2.Vioolsdrift 3.Onseepkans 4.Nakop 5.Noenieput 6.Rietfontein 7.Gemsbok 8.Middelputs 9.Mc Carthy’s Rest 10.Makopong 11.Bray 12.Boshoek 13.Makgobistad 14.Ramatlabama 15.Skilpadshek 16.Swartkopfonteinhek 17.Kopfonteinhek 18.Derdepoort 19.Stockpoort 20.Groblers Bridge 21.Zanzibar 22.Platjan 23.Pontdrift 24.Beit Bridge 25.Pafuri 26.Lebombo 27.Mananga 28.Jeppe’s Reef 29.Josefdal 30.Oshoek 31.Lunatsi (Waverley) 32.Nerston 33.Emhalatini 34.Bothashoop 35.Mahamba 36.Onverwacht 37.Golela 38.Manhoca (Kozi Bay) 39.Montantsa Pass 40.Caledonspoort 41.Ficksburg Bridge 42.Peka Bridge 43.Maseru Bridge 44.Van Rooyens Gate 45.Sephaphos Gate 46.Makhaleng Bridge 47.Tele Bridge 48.Ongeluksnek 49.Qacha’snek 50.Ramatseliso Gate 51.Boesmansneck 52.Sani Pass 20 19 Northern Province 18 17 11 16 26 10 12 15 13 14 28 29 27 9 Mpumalanga 31 30 Gauteng North West Province 8 32 33 7 6 34 38 35 5 36 37 4 1 40 39 KwaZulu Natal 2 Freestate 41 3 42 43 52 51 44 Northern Cape 50 45 46 49 48 47 Eastern Cape Western Cape

17. Strategic challenges faced by border posts Shifts in cross-border trade Challenges • In terms of South Africa’s value of world trade – trade to our neighbouring countries has declined from 8% in 1995 to 6% in 2002 • Trade in real value to region increasing at approximately 20% • Rail transport is still the dominant mode of transport for cross border freight movement • Road freight cross border movement is increasing particularly through the Lebombo border post • Infrastructure requirements • Infrastructure investment at border posts Integration requirement • Systems integration and data collection • Inter-departmental coordination • Rapid implementation of bi-National border protocols • No properly structured database on freight movements in the region Customer interface requirements • Operator awareness campaign • Training and capacity building

18. Department of Transport Government strategic initiatives

19. Department of Transport Thank you