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SA’s Transport Sector In The Age Of Covid – A Roadmap To Economic Recovery

11 February 2021 – The South African transport sector entered the age of Covid already beset by several major challenges. Ageing infrastructure, a lack of impartial regulatory bodies, an unfriendly environment for private sector collaboration, over-reliance on roads for both public transport and freight, and a skewed subsidy model are a few of the structural obstacles that were present.

Covid-19 has both highlighted and exacerbated these hurdles and must force the industry out of complacency.  The challenges it faces must be viewed as opportunities, with the problem areas providing a guide to the solutions that can be delivered with maximum impact, where they’re most needed.

A study conducted by Business for SA and global management consultancy firm Kearney, found that the already beleaguered transport industry had been further imperiled in 2020, and in the absence of any interventions, would likely plunge into an L-shaped curve in terms of both GDP generated and employment levels, from which it would take at least five years to emerge.

However, Sujeet Morar, principal at Kearney, believes that the challenges are not insurmountable and that there are solutions in the form of interventions that have the potential to deliver up to R223 billion and create up to 168 000 formal-sector jobs, figures which far exceed the potential losses incurred by the Covid-19 pandemic. But for these to be effective, government will have to act swiftly, delegating efficient, accountable teams, and galvanising private-public collaboration.

Pre-Covid studies positioned transport among the high-impact, high-potential growth sectors earmarked for priority interventions (along with sectors like financing, petroleum products, metals, and construction). All of these have the potential to induce cascading benefits that ripple throughout the broader economy, but perhaps none more so than transport.

“Inasmuch as it enables the movement of people and goods, the transport industry is a necessary facilitator and catalyst of every other industry at the macro-economic level. It is a crucial determinant of development metrics like GDP, and also prefigures a nation’s overall competitiveness in the global economic arena. Just as other industries rely on transport, transport itself is reliant on a functional, well-maintained infrastructure of roads, railways and ports, both air and sea,” explains Morar.

The role of transport in an economy is double-edged. It at once serves the demand of other sectors, and it drives national and industrial competitiveness at regional, national and global levels through enhanced process efficiencies and cost improvements.

Within the land-based road and rail subsectors, the freight industry is the primary contributor to income, approximately 55% of which is derived from three key industries – mining, manufacturing, and agriculture.

“Re-energising transport starts with sound governance. We advocate for a Single Transport Economic Regulator (STER), as well as a standalone ports authority and an independent rail regulator. Such structures would provide transparency, impartial oversight, and enhanced competition. In addition to this, we recommend a strong government-enabled model for collaborative networking amongst SMMEs, private companies, and academies or associations,” Morar adds.

The Covid-19 pandemic and its after-effects are ushering in a veritable fourth industrial revolution for the SA transport sector. “We anticipate many more Private-Public Partnerships (PPPs), including collaborations with logistics partners, to overcome traditional obstacles and start to forge more cost-effective, multi-modal transport solutions,” says Morar. Source (Freight News)