T here are two points from which to view the wave of investment in the ports and supporting infrastructure serving southern African countries. Port authorities from Dar es Salaam on the east coast to Walvis Bay on the west are making the investments needed to handle a million TEUs by the early 2020s. With the notable exception of Ngqura in South Africa, the plans to create shipping and logistics hubs include investment in the landside road and rail networks serving the ports. These networks stretch over thousands of kilometres, and are starting to interlink across the sub-continent. Shippers in Malawi are able to roadfreight cargo through Walvis Bay rather than Nacala or Beira – using the same roads that link the Copperbelt to the Mozambican ports. This relatively recent development brings home to port operators and governments investing billions in the harbours and supporting infrastructure that competition is heating up. Pressure is also being put on hauliers, logistics companies and warehouse operators who have invested heavily in a specific corridor – mainly the one between the hinterland and Durban. The truth is that Durban is fast losing its dominance as capacity and reliability in other ports serving the region improve and the very real threat of having a cargo hijacked in South Africa forces shippers to look elsewhere. For cargo owners and entrepreneurs this disruption in the status quo is creating new opportunities to save costs by optimising logistics. Ironically, as pointed out by a delegate at an October logistics conference in Walvis Bay, the disruption is also creating opportunities for newcomers, the more agile logistics service providers and the ports themselves. To understand the dynamics that are creating the opportunities it may be useful to take a quick journey through the theory of disruption coined by “the father of disruption theory” Clayton Christensen in the Harvard Business Review more than a decade ago. “Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. This is evident where one sees ports like Walvis Bay, Maputo and Beira challenging Durban. In conversations with FTW the port authorities are no longer talking about supplementing Durban, they are now positioning themselves as an alternative. That is fighting talk which indicates their determination to disrupt the flow of freight in the SADC. All other ports in the region are being understood to be competition as well. Meanwhile, the Transnet family seems to be following the pattern described by Harvard professors Christensen and Rory McDonald together with Deloitte Consulting director Michael Raynor in the December 2015 issue of the Harvard Business Review: “Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.” Transnet Freight Rail has been cautioned against its emphasis on moving bulk in preference to containers. Road has already taken the container market, and hauliers – like shipping companies – can shift their routes overnight, depending on the demands of the market. “Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more suitable functionality – frequently at a lower price,” add the authors. This is one area in which the other ports are not well positioned. Maputo, for example, has been shown by shipping companies to be the most expensive port on the east coast. FTW often hears complaints about other ports in the region being more expensive than Durban – particularly when the rand is low. South African port fees are in rand, while other authorities work in dollars. If the commodity is dollarbased then there are considerable savings to pay port fees in rand rather than dollars. But, that is changing as halfempty stacks drive home the message to terminal operators that just having the infrastructure does not guarantee business – the whole logistics chain must be more competitive than the alternative. In order to become more competitive the authorities are turning to the private sector – and there are opportunities opening up for logistics companies to get involved in public private partnerships across the region. Looking at the bigger picture, the fact that investors, entrepreneurs and shippers are enjoying an unprecedented choice of corridors and gateways is good news for the region as a whole. Countries like Zambia and Namibia now have industrialisation plans and policies in place. Other countries are following suit as they strive to disarm the ticking social time bomb that is youth unemployment. Inland countries have also changed the way they perceive themselves – they are no longer “land-locked”. They are “landlinked”. They now have a choice of corridors and ports – which want their business. And, thanks to the growing interconnectedness of the region, they can see their neighbours as markets – not just transit routes for trade with China and Europe.
INSERT
Infrastructure does not guarantee business ― the whole logistics chain must be more competitive than the alternative.
.PNG)
