After declining abruptly in January, the Ctrack Transport and Freight Index (Ctrack TFI) subsided further in February to an index level of 118.6, a drop of 0.8% compared to January’s level of 119.6 and the lowest since February 2023.
Although the pace of decline has subsided compared to January, the heavy-weighted road and rail freight sectors were the main drivers of the further deterioration. However, despite a further drop on a monthly basis, the Ctrack TFI is still 2.5% above year-ago levels.
In February, four of the six sub-sectors declined on a monthly basis (see graph 2), with only the sea and air freight sectors expanding. However, compared to a year earlier, four of the subsectors still increased, with only road and air freight contracting. While the interdependence and intertwined nature of the logistics sector soften the overall impact of weakness in some sub-sectors, the sector remains overall on the back foot and in urgent need of intervention and structural reform.
Recent developments are encouraging, including the approval of the Freight Logistics Roadmap, the appointment of a permanent board for Transnet National Ports Authority, the passing of the Economic Regulation of Transport Bill and the publication of a draft network statement detailing how private sector access will be governed. While industry reacted negatively to the level of the proposed tariffs included in the statement, at least, the option for private sector participation is on the table and negotiations could be forthcoming.
In a report titled ‘Decarbonising South Africa’s Transport Sector’ published in 2023, based on research done as part of the Climate Pathways and Just Transition Project run by the National Business Initiative (NBI), in partnership with Business Unity South Africa and Boston Consulting Group, the conclusion was reached that for South Africa to cut greenhouse gases (GHGs) in the transport sector to net-zero by 2050, among other recommendations, between 15% to 20% of road traffic must move to rail. This shift, the report noted will also be key in addressing road congestion and improving the efficiency of the overall transport system.
While some progress has been made to stem the deterioration in rail freight, among others, the approval of the Freight Logistics Roadmap, that provides a clear reform path towards resolving immediate operational challenges driving the decline of rail and ports and outlining interventions required to fundamentally restructure the logistics sector through policy and legislative interventions, a long road is ahead and any notable impact of interventions is only likely to be seen in the medium term.
Following five years of annual declines (2018-2022), rail freight payload increased by 2.5% in 2023, off an extremely low base and clearly continuing to underperform given ongoing challenges plaguing the sector. Among others large-scale theft of copper cables, insufficient maintenance, lack of locomotives, corruption, derailments, and vandalism on freight trains are common and hampering the sector’s performance.
On the other hand, the road freight sector, which has grown notably in recent years and now accounts for 84.5% of all freight payload in South Africa, had experienced multiple headwinds during 2023, but still managed to increase by 1.5% in 2023, compared to growth of 21.7% and 8.9% in 2022 and 2021, respectively. The sub-sector remains the backbone of logistics in South Africa, although it comes at a cost to the economy, as transport via road remains notably more expensive than transport via rail.
Both the road and rail freight sub-sectors subsided in February, signalling that many challenges remain in the early months of 2024. The rail freight sub-sector declined by 3.0% m/m in February, following on hefty drop in January, taking the index almost 10% lower compared to end-2023. Road freight declined by 1.0% on a monthly basis in February, the fourth consecutive monthly decline.
