Target low hanging fruit first

While there’s general consensus that a modal shift is critical, the timing depends on the market segments involved, says Prof Jan Havenga of Stellenbosch University. “There are four to consider,” says Havenga, “namely bulk export of mining commodities, domestic delivery of mining commodities to local production facilities, intermediate movements of semi-beneficiated commodities to final manufacturing (such as coiled steel to automotive manufacturers) and the domestic intermodal movement of especially food and other FMCG products on pallets from manufacturing facilities to distribution centres and between distribution centres.” The prioritisation of these four segments is based on the following logic, he explains. If the country does not invest capacity in bulk mineral exports, South Africa’s exports will be severely affected at a time when it can ill afford it. “We need to build the capital reserves earned from exports to develop domestic beneficiation capabilities. If we’re not effective in getting raw materials to production facilities we’ll arrest our beneficiation plans. If we fail to move semi-beneficiated products around they will still move, but at a higher cost, and if we don’t make a giant leap forward with domestic intermodal, costs will skyrocket. Failure in the first two segments will stunt supply. Failure in the last two segments will make supply extremely expensive.” In other words, says Havenga, it is about targeting the lowhanging fruit first.