CHAPTER 3

THE ROLE OF TRANSPORT IN THE SOUTH AFRICAN ECONOMY

3.1 INTRODUCTION

Chapter 2 focused on the role transportation plays in the USA’s GNP and in

the UK. The REDEFINE study conducted in European countries on the

relationship between economic activity and road freight transport was also

briefly discussed.

Some modal share splits from countries around the world were highlighted

and the conclusion was drawn that in many countries road transport

dominates the freight transport market, as is the case with the South African

situation. Brazil and Canada were used as international countries to compare

the South African transport environment to.

This chapter will focus on the important role of freight transportation in the

South African economy. Transportation’s contribution to South Africa’s Gross

Domestic Product (GDP) and employment creation in the sector is

investigated. Annual volumes and growth in land freight transport, obtained

from Statistics South Africa (SSA), are also discussed.

The chapter will also focus on the role of maritime, rail, pipelines and air

transport modes of transport and the role that these modes of transport play in

the South African economy.

3.2 THE RELATIONSHIP BETWEEN TRANSPORT AND THE REST OF THE

ECONOMIC SYSTEM

According to the Moving South Africa strategy (MSA), transport plays an

integral part in the economy of South Africa, whether directly or indirectly:

“Classic macroeconomic theory suggests that productive infrastructure,

including transport assets, is one of several key preconditions for national

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economic growth. The theory holds that by investing in assets like bridges,

roads, ports, or even telephone lines, a nation can structure development by

reducing transport and communications costs, thereby facilitating further trade

and creation of wealth. Indeed, transport is generally seen as an engine of

growth and a guarantor of national integration, both internally and with the

external global economy” (Moving South Africa 1999).

Transport employs many people in South Africa and globally; it also accounts

for a substantial number of jobs in the national economy and has supplier

industries and customers of its own. It is an industry in and of itself.

However, for the purposes of the White Paper on National Transport Policy

and the MSA strategy, the Department of Transport adopted the view that

transport is best seen as an enabling industry, one which exists not only to

meet goals inherent to transport, but also to meet other pressing national and

social objectives. Examples of such non-transport objectives include (but are

not limited to):

• Economic growth, creating a high and rising standard of living for all

citizens as set out in Growth, Employment and Redistribution

Programme (GEAR) and the Reconstruction and Development

Programme (RDP),

• Increased trade, especially with neighbouring Southern African

Development Community (SADC) countries,

• Improved access to employment opportunities, or

• Increased social integration.

Transport, therefore, becomes a critical input for other industries and other

social objectives set outside of the transport context (White Paper On National

Transport Policy 1996).

Providing effective and efficient infrastructure underpins all attempts to reduce

poverty. Trade is the engine of economic growth, and reliable and efficient

transport is essential for successful trade. Transport is needed to facilitate

commercial exchanges and production: it enables farmers to bring their

products to the market and it provides the basis for private investment. The

45

poor state of transport infrastructure impedes Africa’s development and

obstructs poverty reduction (Watson, 1998).

A critical area of focus in South Africa is a seamless logistics system,

characterised by an efficient flow of freight, promoting the economy’s

competitiveness. Transport and logistics should be restructured to ensure that

logistic activities do not act as a restraint on economic growth, employment

and sustainable development. Removal of blockages within the ports and rail

systems are regarded as a priority. An integrated approach is therefore

required in order to use the transport system as a catalyst to stimulate new

development corridors in various regions of the nine provinces (South African

Government Information 2005).

South Africa’s cabinet also approved a five-year road-infrastructure strategy to

prevent the further deterioration of the country’s road network (South African

Government Information 2005).

The Business Report also highlights the importance of sustainable investment

in infrastructure: government is aiming to boost growth to 6% by 2010 and

plans to invest R372 billion in transport, power and housing infrastructure over

the next three years are in place (Seria, N., 2006).

Kevin Lings, a Stanlib economist, wrote the following on the topic: “it is clear

that in order to achieve sustained high growth, South Africa needs increased

infrastructural fixed investment and an increased base of manufacturing

activity” (Seria, N., 2006).

The Professional Society for Supply Chain Management (Sapics) has argued

that the advances made in supply chain management could dramatically

improve the country’s GDP and is targeting logistics, supply and planning.

These three elements must be considered in order to quantify the contribution

of supply chain management to the GDP. The society accentuates the fact

that improved supply chain management can enhance the industry by 10%,

which represents 3% of GDP, and the potential impacts would equal those of

46

the mining sector, automotive manufacturing and the transport sector

(Engineering News 2005).

Cosatu’s newsletter of May 2001 is dedicated to transport as the key to an

integrated economy and society. Jane Barrett, Satawu’s policy research

officer, notes that transport is the cement that integrates and binds production,

trade and consumption in any society. She further mentions that if transport is

available, affordable, safe, convenient and efficient, it can:

• Improve the movement of people, goods and information,

• Help create new investment opportunities

• Affect where people live and work

• Reduce economic polarities between rich and poor (Barret, J., 2001)

Yet the social and strategic significance of transport as an integrating factor is

often under-estimated (Barrett, J., 2001).

The transport, storage and communications sector made up one-tenth of

South Africa’s GDP in 1999, excluding the contribution of in-house and private

personal transport, as well as the entire taxi-industry. Should these activities

be included in the calculation, this sector’s contribution could be as high as

13%. The cost of transport adds to the price of all goods sold. In South Africa,

using 2001’s figures, it amounts to between 1% and 7% of the price of most

commodities (Barrett, J., 2001).

In the president’s State of the Nation Address of 2004, President Thabo Mbeki

committed the government to upgrading the transportation system over the

next five years. Priority would be given to increasing the capacity of the

railways by 30%, enlarging the ports and improving the commuter transport

situation (“Mbeki puts it all on the line” 2004).

South Africa’s transport system has long been a major bottleneck, which

contributes to driving up costs and constraining economic development. With

the industrial capital of South Africa in Gauteng (generating 65% of GDP),

rather than at the coast, as is the case with most developed countries, bulk

47

48

imports and exports are hauled between 600 km and 1400 km from and to the

ports (“Mbeki puts it all on the line” 2004).

The wasted time and costs have a ripple effect throughout the economy, while

diversion to heavy vehicles is crushing our roads. Addressing all these issues

has long been overdue (“Mbeki puts it all on the line” 2004).

The provision of transport infrastructure is the responsibility of the public

sector; therefore the government needs to be closely involved in the process

of infrastructure development and investment. Transport infrastructure

impacts both on users and non-users of the services. The merits of transport

proposals should therefore be judged by their potential impact on all affected

parties and not only on users of the systems and services (Joynt, H, 2004).

Transportation plays a multi-faceted role in the economic development of a

country or region. As can be concluded from Table 3.1, the contribution of the

transport and communications sector towards the annual GDP in percentage

is a substantial part of the total GDP, while the tonnages moved in South

Africa increase every year. Even though the transport, storage and

communication sector’s contribution to the GDP dropped slightly from 10% in

2000 to 9.9% in 2001, the gross value of the sector increased from

R80,799 million to R88,161 million. This implies an increase of over

R7,3 million.

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Table 3 .1 The Contribution of the Transport and Communications Sector to the Gross Domestic Product (GDP) (million rand) Year

1993 1994 1995 1996 1997 1998 1999 2000 2001

At current prices

Gross value added

at basic prices

390,841

440,144

500,352

565,472

627,167

673,860

728,761

808,241

894,901

Transport and

communications

sector

33,972

38,296

44,538

51,787

57,874

63,278

70,868

80,799

88,161

Percentage (%) of

GDP

8.70

8.70

8.90

9.20

9.20

9.40

9.70

10.00

9.90

At constant 1995 prices

Gross value added

at basic prices

471,670

485,781

500,352

521,611

535,321

539,595

551,624

571,432

588,101,

Transport and

communications

sector

38,507

40,281

44,538

47,271

50,879

54,273

58,141

52,211

55,532

Source: Annual Transport Statistics 2002

The total volume of goods transported in South Africa increases every year.

Figure 3.1 illustrates the extent of the year-on-year growth of land freight

transport (road and rail tonnages). (Please note that the private sector

enterprises referred to in Figure 3.1 include only transport by road for reward.)

The total volume of goods transported during the year 2003 increased by

2.9% (19.5 million tons) compared to 2002. This increase was due to

increases of 3.3% (16 million tons) and 1.9% (3.4 million tons) reported by

private sector enterprises (road transport for a reward) and Transnet Ltd

respectively. Figure 3.1 The total volume of goods transported: 2003

Source: SSA (Land freight transport, December 2003)

These large amounts of volumes moved naturally have an influence on the

economy of the country. For example, an increase of over 6 million metric

tons over a period of three years, as discussed above, implies a greater

workforce, higher fuel consumption, more vehicles, etc.

The road freight industry makes an enormous contribution to the economy.

Around 870 million tons of cargo worth some R200 billion are moved every

year. The industry generates around R13 billion in revenue and approximately

70 000 people are employed in the industry with annual remuneration

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estimated at R4.6 billion. Industry taxes amount to R1.1 billion and

contributions towards road funding are in the vicinity of R5.7 billion. During

2001, a total of 3 582 commercial vehicles over 16 tons were purchased at a

cost of about R3 billion. The industry consumes roughly 1 billion litres of fuel

per annum at a cost of R3.6 billion (Deysel, 2002:4).

3.3 EMPLOYMENT IN TRANSPORT

The transport industry in South Africa is a major source of job creation.

According to SSA the transport, storage and communication sector employs

314 000 people on a full-time basis in the sector, which equals around 4.5%

of the total workforce (SSA [Quarterly Employment Statistics, December 2004

and March 2005]). This figure is conservative when considering that sector 7

only includes road transport (for a reward) and rail transport. Many more

people are employed in road transport operations in support of general

economic activity, e.g. transport as a support function and without a profit

motive. The extent of this category of road transport was illustrated in Figure

2.2, where it was shown that in 1991 more than 50% of all freight tonnages

moved in South Africa by all modes of transport were moved by private road

transport operators (not for reward). Each one of these vehicles would require

drivers and support personnel such as on-vehicle staff, maintenance

personnel, technical support etc.

The official employment rates, as published by SSA, in the other sectors are

summarised in Table 3.2.

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Table 3.2 Number of employees by industry: December 2004 Industry Number of employees Mining and quarrying Manufacturing Electricity, gas and water supply Construction Wholesale and retail trade: repair of motor vehicles, motor cycles and personal and household goods: hotels and restaurants Transport, storage and communication Financial intermediation, insurance, real estate and business services Community, social and personal services

456 000 1 179 000

42 000 373 000

1 387 000 314 000

1 550 000 1 774 000

TOTAL 7 075 000 Source: SSA. Quarterly Employment Statistics, December 2004 and March 2005

According to Census 2001 figures, a total of 442 730 people were employed

in the transport, storage and communication sector during 2000; this figure

equates to 4,6% of the total population (Census 2001).

The reason for the difference between the SSA 2004 (314 000) and Census

2001 (442 730) information is not evident, but can be related to the limited

database used by SSA when compiling its sector-specific statistics.

Table 3.3 discusses the total number of employees that were employed in the

transport industry among the different modes during 2002. The total

employees in land, water, air and supporting and auxiliary activities in large,

medium, small and micro enterprises totalled 226 939.

Table 3.3 Number of employees in the transport industry by enterprise size: 2002 Enterprise size

Land

transport

Water

transport

Air transport

Supporting and

auxiliary* activities

Total

Large

Medium

Small

Micro

Total

86 069

10 638

16 934

23 032

136 673

1 380

369

272

624

2 645

17 045

635

1 033

1 987

20 700

23 248

6 413

15 481

21 779

66 921

127 742

18 055

33 720

47 422

226 939

Source: SSA (The Transport Industry 2002, December 2004) *Supporting and auxiliary activities = cargo handling, storage and warehousing, other supporting transport activities, travel agency and related activities and activities of other transport agencies

52

The enterprises referred to in Table 3.2 are businesses entirely focused on

transporting freight and passengers for reward. In other words, private carriers

are excluded from this equation, even though these private enterprises may

well have a transport department, a complement of drivers and assistants etc.

When analysing employment figures for Transnet, one of the largest

employers in the transport industry, the following emerges: the number of

employees in Spoornet totalled 34 771 in 2004. The National Ports authority

(NPA) employed 3 544 employees in 2004 and the South African Port

Operations (SAPO) 5 464 employees in 2004. Petronet employed 568 people

and South African Airways (SAA), 12 556 people in 2004 (Transnet Annual

Report, 2003/2004). The total employment for Transnet (within the major

modes of transport) in 2004 is therefore 56 903. The figures are summarised

in Table 3.4.

Table 3.4 Transnet employees: 2004

Institution Number of employees in 2004

Spoornet

National Ports Authority

South African Ports Operations

Petronet

SAA

34 774

3 544

5 464

568

12 556

TOTAL 56 906

Source: Compiled for the purposes of this study from the Transnet Annual Report (2003/2004)

The importance and extent of employment in transport does not begin and

end with employment in the above industries: construction and maintenance

of infrastructure, and of roads in particular, can be a valuable source of

employment and income opportunities for the poor through income transfer (in

cash or in kind) and the enhanced employability of workers after construction

finishes, as the workers gain more skills and experience. The benefits for the

community are also great and include income multipliers generated by

spending of construction wages, and the creation of useful economic

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infrastructure that can enhance market integration and reduce travel costs

and time for households (Social analysis in the transport sector n.d.).

3.4 SHIPPING

Maritime transport encompasses all forms of transport by sea, intermodal

links and inland ports but has certain fundamental differences from other

modes of transport. First, it caters almost entirely for the freight market, and

offers no significant passenger-carrying ability. Second, as it operates in an

international environment, it is subject to considerable competition and

economic pressure from foreign competitors (Moving South Africa 1999).

Unfortunately, South Africa has no commercially navigable rivers, but ocean

shipping has long been a feature of its transportation network, capitalizing on

the country's two-ocean frontage (South Africa road system and transport

1996).

With regard to the South African shipping environment, the National Ports

Authority (NPA), a division of Transnet, is the largest port authority in greater

southern Africa, controlling seven of the 16 largest ports in this region. These

are Richards Bay, Durban, East London, Port Elizabeth, Mossel Bay, Cape

Town and Saldanha (Transport n.d.).

South African Port Operations (SAPO) operates 13 cargo terminals across six

South African ports. Volumes handled during 2003/2004 increased to the

following:

• Containers: 2,5 million 20-foot equivalent containers, an increase of

6,6% compared to 2002/2003.

• Breakbulk: 13 million tons, which implies a decline of 2% for 2003/2004

compared to 2002/2003, mainly due to the move from breakbulk to

containerisation.

• Bulk: 43,6 million tons, an increase of 5,2% from 2002/2003. Over 28

million tons were handled at the bulk terminals in Saldanha.

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• Vehicles: 232 000 units, an increase of 43,4% from 2002/2003 handled

at Durban, East London and Port Elizabeth (Transnet Annual Report,

2003/2004).

R385 million was invested in infrastructure and equipment to increase

capacity and service delivery, while R20 million was spent on enhancement of

technical expertise and technology (Transnet Annual Report, 2003/2004).

Each major port has traditionally played an important, specialised role in

South Africa's export sector. For example, Durban handles general cargo,

especially cereal exports; Cape Town specialises in exports of deciduous fruit,

wine, and vegetables; and Saldanha Bay was built specifically to export

mineral ores from the Northern Cape.

3.4.1 Port of Durban

Durban's port encompasses 893 hectares of bay area. The port entrance

channel is 12.7 meters deep at low tide. Durban has five deep-sea and two

coastal container berths, and provides 15,195 meters of quayage for

commercial ships. Durban also has repair facilities, including a floating dry

dock. Through the 1980s, Durban was South Africa's busiest general cargo

port, handling as much as 25 percent of the country's imports and exports in

some years, but it was surpassed by Richards Bay in the 1990s. The National

Ports Authority (NPA) was to spend R1,6 billion during 2005 in order to

increase the container capacity at Durban harbour. A project to provide world-

class car-handling facilities at the port has been completed and widening of

the port’s entrance channel has commenced (Transnet Annual Report, 2004).

3.4.2 Port of Richards Bay

Richards Bay, a deep-water port 193 kilometers northeast of Durban, was

commissioned in 1976 primarily to export coal from the eastern Transvaal, but

by the early 1990s it was handling almost half of all cargo tonnage passing

through South African ports. Port facilities can accommodate bulk carriers of

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up to 250,000 tons, with five berths for general and bulk cargo, and a coal

berth (Transport n.d.).

3.4.3 Port of Cape Town

Cape Town has one of the largest dry docks in the southern hemisphere,

including five berths for container vessels and general cargo carriers, a pier

for coastal traffic, and extensive ship repair facilities. The port at Cape Town

has a water area of 112.7 hectares. Designs to increase the container

terminal capacity at the port of Cape Town are under way. The environmental

impact analysis has been completed and the National Ports Authority (NPA) is

awaiting the decision from the environmental authorities (Transport n.d.).

3.4.4 Port of Port Elizabeth

Port Elizabeth's enclosed water area of about 115 hectares has more than

3,400 meters of quayage for commercial shipping and a container terminal

that has two berths. Vessels with a draught of up to twelve meters can use the

harbour, and offshore anchorage is available for vessels of any draught.

Facilities at Port Elizabeth include a mechanical ore-handling plant, which can

process up to 1,500 tons per hour, and a pre-cooling storage area with a

capacity of 7,500 cubic meters (Transport n.d.).

3.4.5 Port of Saldanha Bay

Saldanha Bay, 110 kilometers northwest of Cape Town, is the largest port on

the west coast of Africa and one of the best natural ports in the world. The

facilities at Saldanha Bay provide anchorage in the lee of a breakwater where

the minimum water depth is 14.6 meters. With a port area of about 5,000

hectares, Saldanha Bay is larger than the combined areas of the ports of

Durban, Cape Town, Port Elizabeth, and East London. The ore-loading jetty

can handle carriers of 350,000 tons (Transport n.d.).

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3.4.6 Port of Ngqura

The port of Ngqura, currently (June 2003) under construction 20 km northeast

of the port of Port Elizabeth, is South Africa's eighth and latest commercial

port development, and will be situated at the mouth of the Coega River in

Algoa Bay. The National Ports Authority of SA is responsible for developing

the deepwater port.

Industrial Development Zone, known as the Coega IDZ, is currently under

development over the 12,000-hectare site in the area including the river and

port, with a 4,500-hectare core development immediately identified. The IDZ

will serve as a primary location for new industrial development for export-

driven industries (The port of Coega 2003).

3.4.7 Port of East London

South Africa's only river port, East London, is situated at the estuary of the

Buffalo River in the Eastern Cape Province. Although East London is the

smallest of the six major ports, it has a 75,000 ton capacity grain elevator –

the largest in South Africa. East London handles agricultural exports and is

the main outlet for copper exports from other African countries, such as

Zambia and the Congo (Transport n.d.).

Two other coastal cities – Simonstown, south of Cape Town, and Mossel Bay,

between Cape Town and Port Elizabeth – have substantial port facilities.

Mossel Bay is a commercial fishing harbour between Cape Town and Port

Elizabeth, and Simonstown is a naval base and training centre (Transport

n.d.).

3.4.8 Annual maritime volumes

Annual coastal volumes with freight having an origin and a destination at

South African ports are depicted in Table 3.5 (Information provided by the

NPA (NPA: N Walters 2006, pers. comm., January 13)). The total number of

twenty-foot-equivalent (TEU) containers shipped by South African ports which

57

were destined for other South African ports are shown in column 2. The

assumption is made that each container weighs around 16 tons (norm used

by SAPO). After the TEU figure was added to the bulk and breakbulk cargo

handled by each port, the total volumes handled by each port were calculated.

The column marked “total” indicates the total volumes in metric tons handled

by each port for the year 2004. Table 3.5 Annual coastal volumes1 by port: 2004

Port Full Twenty foot equivalent units

(TEU) (total containers

shipped – originating and terminating on

SA shores)

Assumption by SAPO2

Mass of 16 tons per container (metric tons)

Breakbulk and Bulk Cargo Total cargo

handled (metric tons)

Total

Richards Bay

Durban

East London

Port Elizabeth

Mossel Bay

Cape Town

Saldanha

-

16 804

95

570

-

6 465

-

-

268 864

1 520

9 120

-

103 440

-

323 384

573 784

918 463

886 973

32 457

1 018 725

397 581

323 384

842 648

919 983

896 093

32 457

1 122 165

397 581

TOTAL 23 934 382 944 4 151 367 4 534 311

Source: Compiled for the purposes of this study from NPA personal communication

The total volume of cargo handled by South African ports for the year 2004

was 4 534 311 metric tons. The 1991 volumes, as depicted in the RAU report,

indicated that coastal tonnages were around 463 428 tons (RTPS p.D.9),

while the coastal volumes for 1986 were 1 351 022 tons (Louw p. 208).

3.5 AIR TRANSPORT

Air transport’s impact on Africa is significant. It generates about 470 000 direct

and indirect jobs across Africa, contributing over US$11.3 billion to the African

1 Coastal volumes refer to all maritime cargo originating and terminating on South African shores 2 South African Port Operations (SAPO) assumes an average mass of 16 tons per container

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GDP. African airlines directly employ over 82 000 people. These airlines

contribute roughly US$7.5 billion to African GDP, the airports in Africa

contribute just over US$2 billion and aerospace just over US$1.5 billion

(Opening Address by the Minister Jeff Radebe at the Aviation Safety Seminar

2006).

The Airports Company South Africa (ACSA) is the largest airports authority in

Africa and owns and operates South Africa's nine principal airports, including

the three major international airports at Johannesburg, Cape Town and

Durban. The other six domestic airports are situated in Bloemfontein, Port

Elizabeth, East London, George, Kimberley and Upington. The Company has

a 35-year concession to operate Pilanesberg International Airport near Sun

City in the North-West Province.

Together, the 10 airports handle more than 200 000 aircraft landings and

10 million departing passengers annually (ACSA n.d.).

During 2003 ACSA airports handled 23 683 international aircraft landings,

with a total of 3 430 664 passengers. Domestic landings accounted for 122

105 movements with a passenger total of 8 074 116 people. Regional aircraft

landings totalled 11 060, representing 343 168 passengers. The number of

non-scheduled aircraft landings were 56 087, with 52 071 passengers. ACSA

airports host 39 international airlines and seven domestic airlines (ACSA

Annual Report 2003/2004).

Apart from providing secure infrastructure for airlines to move people and

goods around, ACSA is proactive in the promotion of tourism and facilitation

of economic growth, job-creation as well as protection of the environment.

In line with the New Partnership for Africa's Development (NEPAD), ACSA

has also invested enormous time and effort in finding opportunities to assist

and invest in airport development in other African countries (ACSA n.d.).

The annual domestic airfreight volumes for South Africa are calculated to be

roughly 33 443 kg (ACSA: Total freight and mail. Calendar year 2004.

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Domestic volumes only). The Rand Afrikaans University’s RTPS report of

1993 reported air transport tonnages of 167 664 tons during 1991 (RTPS p.

D.9). This figure probably included international airfreight, as the present

volume of international airfreight, according to ACSA, is about 300 000 tons.

3.6 RAIL FREIGHT

Spoornet is the largest division of Transnet. It is made up of six businesses,

namely:

• GFB Commercial

• COALlink

• Orex

• Luxrail (passenger transport)

• Shosholoza Meyl (passenger transport)

• Spoornet International Joint Ventures

The passenger services will not be discussed, as this study’s focus is on

freight movement.

Spoornet maintains an extensive rail network across South Africa and this

connects with other rail networks in the sub-Saharan region. Its rail

infrastructure represents about 80% of Africa's total. Spoornet is active in

some 17 African countries (Transnet Annual Report, 2003/2004).

The 2003/2004 Transnet Annual Report reported that the volumes railed by

Spoornet during this period totalled 83 million tons against a budget of 84

million tons. The coal line railed 66 million tons and the iron ore line railed 27

million tons (5,9 % more than the volumes railed in 2003), with a record

weekly tonnage of 585 000 tons (Transnet Annual Report, 2003/2004). The

83 million tons referred to above will be used in further freight calculations, as

the coal and iron ore are moved by dedicated lines and no other viable

alternative exists for these purposes. Therefore, 83 million tons will be

accepted as the annual tonnages of general freight transported by Spoornet

during 2004.

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During 1991, Spoornet transported a total of 153 806 101 tons, of which

90 880 4643 tons were general freight (excluding coal and iron ore) (RTPS,

p.D.9). Louw reported tonnages of 131 295 008 for 1986, including coal and

iron ore (Louw p. 208).

3.6.1 GFB Commercial

GFB Commercial is the largest of Spoonet's business units and was

previously known as General Freight Business. GFB is responsible for roughly

70% of Spoornet’s income (Transnet Annual Report, 2003/2004).

GFB Commercial manages the flow of material and information between

suppliers and customers along sections of their supply chains. It strives to

integrate the rail component of the supply chain with adjoining components in

order to increase supply chain efficiency and reliability at the lowest possible

cost.

3.6.2 COALlink

Coal is a vital export commodity and generates billions of rands in foreign

exchange earnings for South Africa. COALlink is a specialist business unit

that provides world-class transport for South Africa's export coal from the

Mpumalanga coalfields to the Richards Bay coal terminal. It is one of the

world's most efficient bulk export logistic supply chains, and its steam-coal

export tonnage is second only to Australia's (Transnet Annual Report,

2003/2004).

3.6.3 Orex

Orex is a Spoornet specialist business unit dealing with the transport of iron

ore over the 861 km railway line from Sishen to the port of Saldanha.

Following the high demand for ore in the export markets, improvements to the

3 This figure excludes the iron ore and coal transported by Spoornet during 1991. Total for Spoornet for 1991 was: 153 806 101 minus 17 125 637 (iron ore) minus 45 800 000 (coal) (Spoornet: F Callard 2006, pers. comm., March 8).

61

line implemented since 1998 have resulted in the capacity of the Orex line

being increased from 18 million tons a year to more than 22 million tons a

year. Further expansions are now in the pipeline.

Rated in a recent benchmark study as 38% better than the next best-practice

operator in its field, Orex is already achieving both its vision and its mission to

be an international leader in providing world-class heavy-haul logistics

solutions for a growing market (Transnet Annual Report, 2003/2004).

3.6.4 Spoornet international joint ventures

Through its railway operations, Spoornet aims to become a significant global

player in the provision of freight logistics solutions to its customers on the

African continent and beyond. The International Joint Ventures (IJV) business

is Spoornet's vehicle for achieving this (Detail of division: Spoornet n.d.).

3.7 PIPELINE TRANSPORT

Petronet is responsible for the transportation of liquid fuels: petrol, diesel, jet

fuel, crude oil and gas (methane-rich gas). The total product throughput is

about 16 billion litres per annum, with gas throughput representing 334 million

cubic metres per annum. When the fluid volumes are converted into tonnage

for the purposes of the calculation of the South African modal split, the

tonnages moved by Petronet amount to roughly 14 million tons (Petronet: R

O’Hare 2005, pers. comm., October 5). The RTPS study of 1993, found that

pipelines transported around 1 million tons during 1991 (RTPS p.D.9).

In his 1986 study Louw reported that pipeline tonnages under the heading of

“Other” transport amounted to 578 891 (Louw p. 208), indicating a large

growth in the pipeline tonnage transported between 1986 and 2005.

3.8 CONCLUSION

In this chapter the importance of and the role transportation plays in the South

African economy were discussed.

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A modal split for the South African economy can be compiled at this stage,

based on current available statistics and tonnages. The results are depicted in

Table 3.6. Table 3.6 South African modal split: 2004

Mode Actual tonnages

Road4 504 674 000

Rail5

Air6

Coastal7

Pipeline8

83 000 000 33 443

4 534 311 14 029 000 TOTAL 606 270 754

Source: Compiled for the purposes of this study The modal split, as depicted in Table 3.6, is graphically illustrated in Figure

3.2. Figure 3.2 Preliminary South African modal split: 2004

Road83%

Rail14%

Air0%

Coastal1%

Pipeline2%

Source: Compiled for the purposes of this study

4 SSA. Land freight transport. December 2003. The latest figure available from SSA is for 2003. 5 Transnet Annual Report 2003/2004. Iron ore (27 million tons) and coal (66 million tons) are subtracted from the total Spoornet tonnages of 176 million tons as these tonnages are captive to rail and modal choice is not a factor. 6 ACSA: Total freight and mail. Calendar year 2004. Domestic volumes only. 7 NPA: N Walters 2006, pers. comm., January 20. 8 Petronet: R O’Hare 2005, pers. comm., October 5. Petronet confirmed this figure as correct. Petronet has significantly increased its usage since 1991.

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From Table 3.6 above as well as the graphic depiction (Figure 3.2) it can be

seen that road transport represents 83% of all freight tons moved in the

country, followed by rail (14%) and pipelines, representing 2% of all freight

tonnages.

The South African modal split, and especially the road transport component

thereof, as depicted above is based upon SSA information reported in 2003.

As has been mentioned previously in this study, this split will in all likelihood

change with the inclusion of the private carriers.

In summary, the important role the transport industry plays in creating

employment and job opportunities was briefly discussed in this chapter.

According to Census 2001 figures, a total of 442 730 people are employed in

the transport, storage and communication sector. This figure equates to 4,6%

of the total population, but is significantly higher when taken as a proportion of

the economically active population.

Maritime freight transport, airfreight, rail freight and pipeline movements were

discussed and an indication was given of the volumes moved by each of

these industries on an annual basis.

In Chapter 4, the research methodology followed to determine the South

African road freight tonnages will be discussed in detail. The classification of

the South African economy is outlined and the different sampling methods

briefly outlined. The sampling method followed in the study and the number of

questionnaires sent out to every economic sector are discussed.

An analysis of the questionnaires is undertaken and the South African modal

tonnage split for 2004 is calculated from the information gathered.

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