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April 2023 – FSA meets President Ramaphosa

FSA met with President Ramaphosa and relevant Ministers to discuss the dire state of ports and rail in South Africa on Wednesday night 5 April. The meeting was extremely useful. FSA was represented by our Executive Director Mr Micheal Peter and Operations Director, Mr Francois Oberholzer and the CEOs of MONDI, SAPPI, NCT, TWK and PG BISON. The President was joined by Ministers Patel, Chikunga, Gordhan and Mantashe, as well as the Operation Vulindlela team in his office, with whom FSA has been working closely in both the logistics and energy task teams.

Our candid presentation on the ports and rail crisis and our recommendations for the urgent remedy thereof was sincerely appreciated by the President, as were those from the mining, agriculture, automotive and freight forwarders sectors, who also gave hard hitting presentations on the crisis and whose recommendations were perfectly aligned with our own.

The President in responding to our recommendations:

  • Agreed that the transport challenges were at least as damaging to our country’s growth, as the energy challenges are.
  • That he was certain that we could and must address these quickly through our collective efforts and in the same manner as the country is doing to address the energy crisis.
  • He advised that the regulatory and structural reforms which the OV team had shared with us in our task team meetings were indeed being implemented.
  • Agreed that private sector participation in ports and rail had to be fast-tracked as Transnet cannot resolve the crisis themselves.
  • Stated that he has already met with Transnet and their Board to address the crisis directly with them.
  • That he recognised and greatly valued the PPGI investment commitments which our members had made to him and honoured and that he knows full-well that these were contingent upon the State addressing several binding constraints like rail and ports.
  • Most importantly, he agreed to the creation of a national logistics crisis committee in the Presidency, as has been done to address the energy crisis and that he would announce this during the upcoming Investment Conference. This was a major achievement as without such a committee, there is no hope of ensuring alignment between Transnet, DPE, DoT, NT and the SAPS, all of which have to be in concert for the reforms to be implemented.
  • That he would take direction from the OV task team (in which FSA and the PPGI logistics expert, Mr Ian Bird serve) on the structure and Terms of Reference of the crisis committee but that it would be the correct vehicle through which to drive the structural and regulatory changes urgently needed.
  • That he would meet with the Minister of Finance to address the points we made about fiscal support to TN being contingent upon a dramatically improved service to key sectors like ours and other key PPGI sectors which did not feature adequately in Transnet’s current strategy.
  • That he agreed that the Minister of DFFE should be drawn in, especially on the issue of the long-standing PBS vehicles challenges we are still having with DoT. Interestingly, Minister Chikunga of DoT, in responding to our point, indicated that she had on the 24th of March approved the exceptions for ISO and High Cube containers and so we are certain that the PBS exemptions will follow shortly. This has been a decade-long challenge with the DoT and will provide major relief for our sector and others using PBS vehicles.
  • That the Ports Regulator and the Interim Rail Economic Regulator (soon to be replaced by the Transport Economic Regulator) will assist greatly in both the tariff challenges and in facilitating greater private sector participation in ports and rail.
  • That he would also be meeting with Labour to garner their support in addressing this crisis because as we mentioned in our last message to members, there are long-standing and deeply entrenched political and social challenges which will need to be addressed in solving the logistics crisis. Similar challenges exist in the energy sector but the President has been able to deal with these and so we are certain that the same can be done i.r.o. rail and ports.

We will keep members abreast of progress as this process unfolds further but it was clear from our engagement with the President that the long awaited structural and operational reforms, are finally being implemented and that there is good reason to be optimistic that these challenges will soon be resolved, and our economic growth will be back on the correct trajectory.

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