Road freight booms on agriculture yield

Roads in the Free State are

accommodating double the

number of trucks they did

a year ago, thanks to the

resurgence in the country’s

agriculture

sector.

This

was the

heartening

news relayed

by economist

Mike

Schussler

during a

Transport

Forum

Special

Interest

Group event

held in

Johannesburg

last week.

Schussler said

roadfreight, with

around 90% of the market

share of transportable

goods in South Africa, was

up 9% versus the same

time last year, thanks to

the boom in the agriculture

sector. Rail freight volumes

are similarly up, although

its performance came

courtesy of improved bulk

commodities demand.

But while bulk

commodities like coal, iron

ore and manganese are still

in demand, the country is

becoming ever more reliant

on commodity

cycles. “Any

weakness

in that cycle

will be felt

immediately,”

he cautioned.

Schussler

said the

indicative

prices in rail

freight had

increased

tremendously,

partly due

to the surge

in iron

ore demand and partly

due to cost pressures

inherent in state-owned

enterprises (SOEs). “Our

SOEs are unable to keep

their costs down, which

presents a significant

problem.”

He said seafreight

volumes were up 4.9%

compared to last month,

with imports up 10%.

However, the country’s

export market was f lat and

breakbulk cargo was down

9.6% on a year ago.

“Container throughput

indicates there has been

growth in global container

trade and that world trade

is slowly recovering. The

throughput of containers in

85 of the world’s harbours,

including Durban, has

reached a record level. If

those container volumes

continue to grow at 7.5%,

it gives us a very good idea

of how quickly the world

has become one place – and

how important transport is

going to be in it,” he said.

Schussler explained

that all emerging

market economies,

particularly those with

commodity outlooks –

Argentina, South Africa,

Russia, Brazil, Indonesia

and Mexico – had all

experienced large declines

in their currencies. This

had helped South Africa’s

mining sector survive.

“Our commodity market

also peaked much later

than the US dollar one did,

because the rand weakened.

In addition, our fall was

‘only’ about 25%, and since

then we have recovered

ground somewhat.”

He added that

most South

African

companies

needed

to invest

outside

of South

Africa. “We

used to be

an attractor

of foreign

capital. The

direct,

fixed

investment of South Africa

at the end of the second

quarter of 2017 was over

R2.8 trillion. In other

words, 60% of our GDP’s

value is being invested in

other countries.

“We are still very

much cash f low

positive, but it is

dicey,” he concluded.

INSERT & CAPTION

Container throughput

indicates there has

been growth in global

container trade and

that world trade is

slowly recovering.

– Mike Schussler