Abstract
D.Phil.
The progress of the South African economy relies heavily upon earnings from physical exports, which depend increasingly upon the competitiveness in global markets of the maritime supply chains that serve the country. Competition in world markets is becoming increasingly stronger as production resources are obtained globally and subsequently the competition exists between the effectiveness of whole supply chains rather than only production costs. South Africa therefore has great interest in ensuring that its maritime supply chains compare with world best practice. Amongst other things, this world best practice requires those chains to function as entities structured to serve their logistical purpose, i.e. that it should not include links consisting of separate transport businesses. In practice, this requires that links traditionally provided by third parties be structurally integrated as cost centres instead of profits centres in the chains. Such integrated maritime supply chains will inevitably only be developed by the intervention of chain leaders.
South Africa’s major supply chains conveying commodities and manufactured products are examined in order to determine the scope for the integration of their links as a means of raising their efficiency as ‘complete chains’. Features of selected maritime supply chains serving other countries that could serve as models for the structuring of South Africa’s are identified.
Transnet’s role in the existing maritime supply chains in accordance with the policy of the Government is examined and attention is focused on the under-investment in recent years that has led to the deterioration in the company’s performance. The rejection by the Government of the privatisation of the core assets of the railways and ports in favour of public-private partnerships, as a means of overcoming the problems, is considered in order to conclude whether a solution will be forthcoming in that manner. Special consideration is given to Transnet’s proposed spending of R40bn on infrastructure projects and attention is focused on the fact that this will not address all the problems.
The marine links in South Africa’s maritime supply chains are currently provided by foreigners. Virtually all South Africa’s bulk exports are sold free-on-board, which concedes control over the shipping of the cargo to foreign importers. Reasons for such arrangements are complex and chartering by South African exporters in order to maintain control is often not feasible, although it is done in the fruit trade and by Australian exporters of iron ore competing with South African exporters. Ship owning by South Africans will facilitate new legislation to increase the market share of citizens in the country’s exports and imports, but price-wise market entry will be difficult and it is debatable whether exporters will make use of their services. In the liner trades, the trend is for shipping companies to integrate port and overland links into their services, and the efficiency of South Africa’s container supply chains will need to be raised in that manner.
The criteria for determining maritime supply chain efficiency and the integration of the links of particular South African chains based on their cost structures, as well as the leadership needed to pursue such development, are motivated. Proposals are also made for the integration of the links of the iron ore and coal supply chains under the leadership of public-private partnerships, as well as for a container supply chain incorporating both a dedicated terminal in the Port of Ngqura and the railway between Coega and Gauteng, under the leadership of a liner shipping company or consortium of companies.
The conclusion is reached that the present role of Transnet in accordance with the declared policy of the Government is not conducive to improving maritime supply chain efficiency through the structural integration of the links. It is also concluded that the efficiency of the chains could be raised through private leadership with public participation, subject to a change in the Government’s policy towards the role of Transnet in order to allow such leadership.
Prof. J. Walters
Prof. G.C. Prinsloo