SA to play leading role in new Asia transport corridor

South Africa will become the starting point of a new transport corridor to Asia in the decades ahead – but significant investment in transport infrastructure is crucial to develop new transport routes and expand existing ones. According to recent research into transport and logistics trends in the decades ahead undertaken by PricewaterhouseCoopers – Transportation & Logistics 2030 – emerging markets – global trade in goods and services is likely to rise more than threefold to US$27 trillion in 2020. And half of the increase is expected to come from emerging economies. PWC director Akhter Moosa told FTW there was general consensus that this development would relocate global trade flows and new transport corridors would emerge. “The African continent, including South Africa, is already experiencing this shift,” said Moosa. “Emerging markets such as China and South Africa fared relatively well during the recent economic downturn, and freight flow between these emerging market countries continued to strengthen. Asia’s heavy industry has been an important source of demand for iron ore and coal and South Africa remained an important source of these commodities,” he said. China and India are a huge demand source of commodities, says Chris Siewierski of PWC’s corporate finance division. “In the first quarter of 2009, some 25% of coal out of Richards Bay went to China or India. By the first quarter of 2010 that had changed to 42% which shows the dynamics in terms of the growth of commodities out of South Africa to those countries.” But South Africa’s potential is currently being throttled – with significant elements in the country’s logistics performance way below par. However, Siewierski is confident that current interventions could turn the situation around. In a recent World Bank report, South Africa slipped from 24th a year ago to its latest ranking of 28th out of 155 countries in terms of logistics performance based on six criteria – customs, infrastructure, international shipments, logistics competence, tracking & tracing and timeliness. China, at 27, led the group of seven emerging markets ahead of South Africa. But while South Africa was top of the pile in terms of competence and quality of logistics services, it was ranked 57 on the timeliness scale. “And this was largely because of the quality of infrastructure,” says Siewierski. He is however confident that with adequate intervention, the country could well move up the ranks in terms of logistics efficiency. The main driving force behind this will be significant investment by Transnet in rail and ports. “Infrastructure upgrades will translate into improved performance, but the question is whether we will make sufficient progress relative to the others.”