SPEECHES (2003)

SPEECH BY THE KWAZULU-NATAL MINISTER OF TRANSPORT MR S'BU NDEBELE DURING THE LAUNCH OF THE KWAZULU-NATAL FREIGHT TRANSPORT DATABANK 0N 15 AUGUST 2003

Programme Director
KZN Department of Transport Management and Staff
The Freight Transport Industry Fraternity
Members of the Media
Ladies and Gentlemen

Good morning, Ladies and Gentlemen and thank you very much for being here. Lack of statistical information has been one of the greatest limitations affecting the freight industry. We are gathered here today to launch the KwaZulu-Natal Freight Transport Databank. This databank will help solve the problem of the unavailability of consolidated statistics for the movement of freight for all modes of transport.

South Africa has had 3 major Studies of Transport Policy since 1980 and each has been limited by lack of freight transport information. The content of commercial use of Freight Transport is largely unknown. Policies cannot be developed without underlying factual information and analysis of the consequences. Infrastructure planning and investments all depend on the availability of correct data.

To address this need, the KwaZulu-Natal Department of Transport, in partnership with the National Department of Transport commissioned the development of Freight Transport Databank. This Databank will be expanded, updated and developed as a monitoring and policy tool that could be replicated to other provinces in modular form to finally establish the National Freight Transport Databank. As the KwaZulu-Natal Department of Transport we recognise the fact that the Freight Transport systems of KZN are critical South African assets and must continue to operate efficiently. As early as 1998, the KwaZulu-Natal Department of Transport identified the need to obtain freight transport information for policy formulation and for the establishment of this databank.

The KZN Department of Transport is taking Freight Transport Issues seriously. We have come to realise that this Province is losing competitive advantage because of, among other things:

• Sub optimal functioning of our Ports and especially congestion experienced in the Durban Port.

• Sub optimal functioning of the Rail System and especially Rail Branch lines. Some of these have been closed altogether.

• Our roads are over utilised and damaged severely by the over loaders.

• Airfreight is concentrated in Johannesburg and our local exporters find it difficult to export their produce at competitive rates.

• Pipeline transport system is being under-utilised and there are a lot of tankers on our roads. This is a safety hazard to the road user.

• There is no system in place to support our rural areas with freight transport system to expose their produce to the market places which most of the times are located in the urban areas.

We need urgent solutions to these problems. We need to improve the entire transport infrastructure and, as a Province, we want to play a prominent role in the development of King Shaka Airport and the entire Dube Trade Port Project.

South Africa has performed well on global markets. As the gateway province to the rest of South Africa, our provincial economy should not be performing below national performance levels, particularly when the average growth achieved in the volume of manufactured exports has been 7% per annum. KwaZulu-Natal is considered to have a comparative advantage over all other provinces, particularly in the manufacturing, agriculture, tourism and transport sectors. Our comparative advantage lies in the fact that KwaZulu-Natal is the most critical route in South Africa’s global supply chain – our ports of Richards Bay and Durban handle 80% of the value of exports and imports on South Africa’s current balance of payments – and that our own local supply routes are so much shorter and potentially more cost efficient than those of other provinces.

We are a relatively small province with a large population. KwaZulu-Natal occupies only 7,6% of the land area of South Africa. Indeed if we combine the land area of KwaZulu-Natal with that of Gauteng then together we occupy only 9% of South Africa’s land mass, however, collectively we are home to 39% of South Africa’s population and share more than 50% of South Africa’s Gross Domestic Product. Little wonder, therefore, that the band of roads along the N2 and the N3 linking our ports to Gauteng is the busiest import/export route in South Africa.

"Growing international markets provide a unique opportunity to develop the KwaZulu-Natal economy by focusing on the manufacture, production, processing, packaging and distribution of value added products for export. The national priority to promote a value added export led economy supported by an efficient freight transport system could not possibly be realised without significant investments into KwaZulu-Natal's transport infrastructure as we are the most critical route in South Africa's global supply chain."

Ninety percent (90%) of South Africa’s international trade is conducted through maritime transport and the ports of KwaZulu-Natal handle more than 75% of South Africa’s export/import trade. I must stress here that since 1994 the South African government has moved impressively to refocus our economy on global markets by entering into international agreements that have removed trade barriers and which will increasingly result in free trade zones. These include:

• The Southern African Development Community (SADC)
  The SADC countries comprise Angola, Botswana, the Democratic Republic of Congo, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. South Africa’s commitment to SADC is evident from the attention given to improving critical transport corridors (Maputo Corridor, Lebombo SDI, Trans-Kalahari Transport Corridor, etc.) and the signing of protocols establishing SADC as a free trade area by 2008.

• NEPAD
  On average African countries conduct only 8% of their trade with other African countries and 92% with the rest of the world. 30% of South Africa’s international trade is with Africa and South Africa is currently the largest Foreign Direct Investor (FDI) into the rest of Africa. Africa’s heavy reliance on foreign freight insurance and banking to support its export/import trade can create significant opportunities for South African institutions. Furthermore, the African continent contains 30% of the earth’s mineral reserves and has a huge agricultural possibility, including a potential to expand into growing niche markets such as organic grains, vegetables, fruit, nuts and meats. A commitment to develop Africa’s potential will create significant opportunities in South Africa for added value products (processing and packaging). KwaZulu-Natal is strategically placed to take advantage of Africa’s economic recovery.

• The LOME agreement with the European Union
  The European Union is South Africa’s largest trade and investment partner, accounting for some 40% of South Africa’s total world trade.

• United States of America
  South Africa is a beneficiary of both the recently promulgated Africa Growth and Opportunity Act which allows for duty free entry of clothing and selected textiles into the United States and the United States Generalised System of Preferences which grants duty free access for more than 4 650 products. The rand value of South African exports to the United States has increased from R5,2 billion in 1993 to over R25 billion in 2000.

• Latin America
  South Africa and Mercosur (Argentina, Brazil, Paraguay, Uruguay, Bolivia and Chile) signed a framework agreement in December 2000. Trade between South African and Mercosur has doubled since 1994.

• Indian Ocean Rim
  South Africa is a member of the Indian Ocean Rim Association for Regional Co-operation (IOR-ARC) which is a regional grouping of 19 countries whose shores are washed by the Indian Ocean.

• North East Asia
  North East Asia has become a significant trading partner for South Africa. Japan is currently South Africa’s fourth largest overall trading partner.

To address the issues that I mentioned above I have started by creating the capacity within the Department by establishing the Freight Transport Directorate with the specific aim of dealing with Freight Transport and Logistics Issues in the Province.

These challenges have put serious pressure on the transportation system. Under investment in all sectors of the transportation system has become a hindrance to our economic growth. There is under-investment in:

• Rail infrastructure and rolling stock

• Road Network

• Ports

• Airports etc.

As a Department, we are gearing ourselves to take on these challenges. Secondly, we are tackling these through a 5-point plan:

• The establishment of a real-time Freight Transport Bank

• Improvement of rural based Rail Branch Lines Transport

• Development of Freight Transport Policy

• Development of SMME/BEE in the Freight Transport Industry

• Development of Strategies to effect optimum modal split between road and rail

I am going to outline the projects, which are being carried out by the Freight Transport Directorate as mentioned above:

This is being launched today and it is the first of its kind in this country and we hope that other Provinces are going also to be embarking on such initiatives for the whole country will to be covered.

In this project we are studying the entire Rail Branch Line network of the Province with the aim of developing strategies to revive operations in the branch lines and also to look at SMME opportunities. The report on this study will be out by the end of this month (30 August 2003). We will then liaise with Spoornet and other relevant stakeholders on the implementation of the recommendations.

As all of you are aware, the transport system of this country doesn’t have adequate guiding policy, hence this Province has become trendsetters once again in the development of the KwaZulu-Natal White Paper in Freight Transport. This process is at an advanced stage and those of you who participate in the Freight Task Group are aware of the progress thus far. The Draft Green Paper will be submitted to the Transport Portfolio Committee for their scrutiny and approval during the second week of September (2003). At the same time it will be published in the Provincial Government Gazette. The third and the last weeks of September have been set aside for extensive public consultations. Four workshops will be carried out to cover the whole Province. During the month of October we will be consolidating all inputs into the final document, which will culminate in the launch on 21 November 2003 in the ICC.

We are going to try and provide all of you here with the copy of the document to comment and give inputs before the end of September. The document will, however, be available from the Freight Directorate for those without e-mail addresses.

As you are all aware, not much transformation has occurred in the freight transport industry, it is still being dominated by large companies and as per policies of the country the Directorate is involved:

• We are currently identifying and compiling the database of all small operators in the Province and our first initiative will be to provide relevant entrepreneurship training so as to improve their business skills.

• We have been having discussion with other Departments like Agriculture and Economic Development and Tourism in an attempt to identify projects especially in the rural areas where emerging operators can have opportunities. A success has been achieved at a lower scale though as one of the small operators we have identified secured a deal to move produce from Mbumbulu to Hillcrest.

• We are participating in the Development of the Black Economic Empowerment (BEE) strategy in the Transport Sector as per the initiative by the President. We participate in the Road Freight and Maritime BEE strategy development process, which is being led by the National Department of Transport.

• We played a role in the launch of the South African Owner Driver Empowerment Federation (SAODEF) in Durban on 5 July 2003.

There has been an outcry over the rate in which our roads are being destroyed by an increased overloading of heavy vehicles. The perception is that solution to that will be shifting cargo from road to rail. We, the KZN Department of Transport want to act on reliable data before we can implement any policy.

From 1 September 2003 we are embarking on a project to develop sustainable strategies to achieve optimal modal split and we realise that there may be cargo that is on rail but should be on road, and vice versa. The study will be completed in 31 March 2004 and after that we will implement the recommendations thereof.

This Databank that we are launching today will have a positive impact in the following ways:

1. It will provide direction for government interventions, such as legislation, programmes and enforcement actions.

2. As Government, we will be able to monitor the effects of policy implementation on the economy and industry.

3. We will be able to motivate support for modal optimisation and reduce duplication of freight transport infrastructure expenditures.

4. We will be able to support development of freight transportation e.g. airports, harbours and major road corridors.

Right now, the total of imports and exports that commute between Durban and Richards Bay Ports is 119.6 million tons per annum. The cargo that is transported on our provincial roads alone is estimated at 60 to 70 million tons per annum while national roads carry about 30 million tons per annum. Cargo from rail (mainline is 22.4 million tons) while that from branch lines is 2.4 million tons per annum. Air cargo is 5000 tons per annum.

All this happens at the period when the cumulative funding deficit of our roads is R2.9 billion. Yet in spite of that strangulation our Road Traffic Inspectorate's overloading did a marvellous job in terms of overload control in 2002. We weighed 147 113 vehicles out of which 42 291 were overloaded. In other words 28.7% of vehicles weighed were overloaded. We all know that overloading contributes significantly to crashes on our roads. For instance, Heavy Motor Vehicle accidents for 2002 indicate that out of 4950 crashes on our national roads last year, 1021 were heavy motor vehicle crashes, which is 20 % of the total number of accidents. On our provincial roads out of 9720 crashes 1217 involved heavy motor vehicles, which is 12 % of a total number of accidents.

In short, this scenario is an indication of there being a dire need for centralised information to assist in the process of decision-making. Whether we realize it or not transport is one of the major pillars of our economy. South Africa has the most advanced transport infrastructure on the African continent and is recognized worldwide as an emerging market. The Economist Magazine, a catechism of investors, classifies South Africa as an emerging market alongside China, Brazil and Portugal. Our transport infrastructure has a very significant role in this regard. More than 80% of goods and people within KwaZulu-Natal are transported by road. KwaZulu-Natal alone has the most extensive Freight Transport Systems in Southern Africa and handles more than 65% of all import-export cargo in the Region. With the establishment of this Freight Transport Databank South Africa will have the first tool of its kind that will expedite processes of decision-making with regards to freight transport. It is my fervent hope that this tool will help empower decision-makers with regards to freight transport.

Lastly, I would like to encourage you to participate in the KZN Freight Task Group which came into being after I called the Freight Summit back in 1998. It is through this structure that the freight transport issues affecting the Province are discussed. It consists of all stakeholders involved directly or indirectly in the Freight Transport Industry. Through this institution you can channel all your concerns to the Department. You can contact departmental officials about further details. We will appreciate your co-operation in this regard and it is through this participation that our Province will progress and be the preferred export and import hub in Africa.

I thank you.

© 2003 KwaZulu-Natal Department of Transport