Nothing but hot air

The 2011 Road Freight Association (RFA) Convention could not have come at a better time: operators face a plethora of issues, which could well bring this industry to its knees. But did the event actually achieve anything? CHARLEEN CLARKE has serious doubts…

At the very outset I must stress something important: The RFA Convention was an extremely well organised event, which had sincere and noble objectives. And there is no doubt that it was richly needed. As Sharmini Naidoo, CEO of the RFA, pointed out: “There are momentous challenges facing the industry. We are addressing the issues that could cripple business. The recent spate of legislation could have serious issues for operators.”

And yes, the convention certainly did this. All the pertinent issues – from the tolls roads to Aarto to environmental challenges – were tabled. But, while not meaning to be a party pooper, I honestly don’t know that anything was actually achieved. Well, maybe the promise of regular meetings between the RFA and government (more about that later)…

The root of the problem, I fear, lies within the hallowed halls of the Department of Transport (DoT). Not only is it staffed by underqualified people (this was confirmed at the conference), but the DoT is becoming infamous for achieving very little. It could not even manage to get its very own director general (DG) to the conference on time.

And it seems that even Jeremy Cronin, deputy minister of Transport, is hugely irritated by the DoT and its inefficiencies. Throughout his opening address, he made repeated references to the fact that the DG was late. He also openly criticised the department at times.

It is abundantly clear that all is not well at the DoT.

Having said that, Cronin was not just obsessed with doom and gloom. He pointed out that economic prospects for the continent were good. “Growth in the European Union is flat at best, while China and India are steaming ahead. Africa is the third most growth dynamic bound region in the world, after China and India. We are living in the midst of dynamic changes in the global economy. We are positioned as a gateway to this dynamic continent. However, one of the challenges is the fact that only 10% of our trade is within Africa itself,” he noted.

Cronin also saluted the South African logistics industry, pointing out that, according to a World Bank report, South Africa is amongst the 10 most significant over-performers in the world when it comes to logistics (although later he said costs were too high). “There is something quite precious in South Africa. This is a huge asset and resource that we have – and it is represented primarily by you,” he commented.

He also alluded to the Soccer World Cup, giving operators a pat on the back yet again. “The good news about the World Cup is that freight was invisible, which meant that your industry handled the event effortlessly and efficiently,” Cronin said.

However, he noted that South Africa is not without its challenges. “Our geography is not great. Our industry heartland is 600 km from our ports. Some 90% of our tonnage is sea born. We are distant from markets and our own regional market is undeveloped. It is difficult for us to compete with Australia in terms of getting coal to China and India. And our logistics costs – at 14% of GDP – are too high,” he pointed out. This compares to 9,4% in the US.

And that’s just the tip of the problem iceberg… “We acknowledge that road maintenance has been woefully inadequate. We have secured some significant funding – especially for maintenance of secondary roads. This is important. You know better than I that, unless you do proper maintenance, the costs become exorbitant because you have to end up building new roads. But we are spending less than 1% of GDP on our roads; and that’s a problem,” Cronin told delegates.

The second important challenge that he highlighted was the migration of road to rail. “This is not happening; road is taking more and more freight – even when it comes to bulk transport, such as coal,” Cronin pointed out.

One of the most interesting aspects of his speech was that he announced he had abandoned the government practice of getting his speech written by someone within his department – “because it generally involves six pages and two of which are protocol”. This meant that his speech comprised three elements: notes from “colleagues” in the DoT, notes from the RFA, and his own (brutally honest) comments.

The honest bits were the best – of course. He even went so far as to openly criticise the DoT. For instance, he made reference to a “broad transport stakeholder conference”, which apparently took place last year. “My colleagues in the department tell me that three task teams were formed as a result – aviation, port/maritime and rail freight. They seem to have forgotten that I am addressing you – members of the road freight industry – here today. I wonder why no road transport task team was formed?” he queried.

He also read part of a speech that had been written for him by the RFA – although he declined to read the whole speech because, as he pointed out, it was not his speech. However, he did read exerts from it – and the over-riding message was that there was a breakdown in communication between the industry and government. “I can vouch for this – and many of the problems that the industry is facing,” he conceded.

Cronin admitted openly that his department was doing a substandard job. “We had the fiasco of the driver licences. This reflects lack of capacity, lack of understanding of what our job is. The famous high-cube container debate – I am tearing my hair out on this one. My colleagues tell us that they cannot clear bridges; the road officials say that this is complete nonsense. I am now sitting with a second version of a response. They are currently saying that we should agree to a seven-year amnesty. The trade-off would be that no new trailers could be imported that are not lower bed. I am about to send that piece of legislation back for a rework now. I need some research done into the use of these containers here – and also overseas.

“I am trying to give you a sense of shared frustration. I am not sucking up to you. Our relationship cannot be a sentimental one. I cannot perform for your conventions and then go away. We need to make sure that we are the gateway to Africa. We need to get the freight moving, and sustainably so. We need to introduce legislation so that we don’t burn up our roads and destroy the environment. But we also need to be competitive. This means that our capacity to perform effectively and efficiently must be there. The regulations are not there to be roadblocks,” he insisted. (Many operators would no doubt disagree in the strongest possible terms.)

Cronin also tackled the thorny issue of the Gauteng Freeway Improvement Project. “Let’s admit that this is a project that goes back to 2002,” he pointed out. “It wasn’t a secret project, like the arms procurement. It was upfront. It was in the media, and it was never denied that it was going to be tolled. We call them freeways but they are not intended to be free; they are intended to offer free movement.

“You are understandably angry and frustrated at the huge costs. As you know, the minister has held it back. He has established a task team, which has engaged with stakeholders. Without pre-empting any announcements, let me tell you there is not much head room and leg room here. We have a R20,5 billion public debt. It looks like we will be able to mitigate the expenses by extending the repayment period. I suppose we are going to take a lot of flack. The country is not going to be happy. Poor Minister Ndebele had nothing to do with the original implementation – he was sitting down in KwaZulu-Natal when it was first mooted,” Cronin commented with a wry smile.

He added that there were numerous lessons to be learnt from the disastrous Gauteng Freeway Improvement Project. “Civil engineers need to include VAT in their original costs. SANRAL did not include VAT when they budgeted for the freeways. Exactly the same thing happened with Gautrain,” Cronin commented.

Furthermore, he stated that he did not believe that the Gauteng Freeway Improvement Project would alleviate congestion. “Building more freeways does not solve the congestion problem. Then there is South African apartheid geology, which still exists. We are faced with a proliferation of housing estates, which cause huge congestion issues,” he noted.

Responding to Minister Ndebele’s comment that, if people don’t want to use the tolls, they should use public transport, such as Gautrain, Cronin admitted that this was nonsense. “The trouble is that there is not sufficient public transport. Gautrain – if we are lucky – will move 140 000 passengers a day. That’s not even remotely denting the problem,” he noted.

Cronin said it was important to have “a deep discussion about transport priorities”. He singled out Coega and King Shaka Airport. “Were those the right projects?” he asked. “These sorts of projects are often developed as a particular favourite at provincial level. When the province cannot afford the project they come to us at national government level. We have a track record of spending large amounts of money on projects that were perhaps wrong or unsustainable,” he admitted.

Expressing his frustration yet again at the DG not arriving on time, Cronin said that regular meetings would – in future – take place between government and the RFA. Of course, this begs the question: why on earth has this not been happening all along? “I am committing the DG in his absence. I think, as the deputy minister of Transport, I have the power to do this. We engaged the taxi industry – successfully. Why can’t we do the same with the freight industry? It should actually be easier; you have a single federation. I propose that we meet once a month as government and the RFA. I am volunteering myself. Within a month, let’s have our first meeting. It should be lead by the DG or, at the very least, by the deputy DG. The agencies need to be there too – Road Traffic Management Corporation, SANRAL and the Cross Border Road Transport Agency.

“We are losing a lot of capacity to private sector – our best black people are being cherry picked. So we must not be shy to use the CSIR and the University of Stellenbosch for technical capacity during these meetings. We don’t have that capacity within the department, to be honest. I am committing the DG and myself to a first meeting, with the objective of taking it further. You won’t get your way – always. We won’t get our way – always. Let’s move forward and respond to the really important challenges and prospects that we have as South Africans,” Cronin commented.

George Mahlalela, the missing director general, did finally arrive at the convention, and he also painted a gloomy picture. “The funding and financing of transport infrastructure, network development and maintenance is not adequate. We are under-investing in our road infrastructure. This under-investment has started to be felt by sectors such as the freight industry, which has seen a consistent increase in its logistics costs from R194 billion in 2003 to R317 billion in 2007 or 15,9% of GDP, with transport costs making up 53% of the total costs. High freight logistics costs impact on the competitiveness of South Africa’s companies as well as on the price of products purchased by consumers,” he noted. Worryingly, he added that the department does not have the correct “information and statistics to proactively inform policy direction”. So they are boxing in the dark…

He also spoke about the broader stakeholder workshop convened in 2010 (of which no-one in the conference hall was aware), and confirmed the formation of the aviation, port/maritime and rail freight task groups. The point of the workshop was to set up a new agenda for the freight sector, taking into consideration progress or lack thereof since the adoption of the National Freight Logistics Strategy. However, he conceded that no progress had been made since this workshop, saying that another meeting was necessary.

According to Mahlalela, a revised strategy is currently in the draft stages. “We aim to enable sustainable road infrastructure and investment; monitor and effectively enforce road freight movement, and analyse and review current axle mass limits. Furthermore we hope to assess the existing weighbridge network and design,” he told delegates.

A dedicated road maintenance fund has been proposed. This would be managed by the South African Road Fund Administration, a new agency to be set up through a separate act and reporting to the minister of Transport. “But we are not moving forward with this; it can be an academic debate. If we better managed the allocation of funds, we could go far. We need a summit to debate these issues,” he said. Mahlalela also alluded to e-tolling, confirming that an announcement would be made “shortly”.

Alas, neither Cronin nor Mahlalela really said anything new. I have heard the same stories, year after year, at the RFA Convention. This was reiterated by a sms I received from a transport operator in the congress hall later that morning. “Blah blah blah. We heard it all at the RFA Convention in Mauritius – over a decade ago. What has the Department of Transport achieved since then? Absolutely nothing.”

I rest my case.