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Automotive Industry
is committed to
help Government

Figures show that the road freight industry moved about 920-million metric tonnes of cargo in 2005 - a growth of about 200-million metric tonnes from 2004. During the same period, rail cargo haulage grew by a mere five million tonnes.

The South African automotive industry is committed to enhancing the capacity, reliability and cost competitiveness of South Africa's overall infrastructural and logistical support facilities. So says Dr Hansgeorg Niefer, chairman of DaimlerChrysler South Africa's management board and member of the executive committee of the National Association of Automobile Manufacturers of SA (NAAMSA).

Dr Niefer says the industry is looking to work alongside the national government and state-owned enterprises such as Eskom and Transnet to find feasible solutions to increasing challenges in the areas of logistics and infrastructure development.

He says that this co-operation will not only enhance the local automotive industry's ability to attract foreign investment but will also strengthen the local economy through infrastructural development projects, job creation, skills development and investment.
 

Dr Hansgeorg Niefer... "the solution lies in looking at the logistics value chain in its entirety as the different modes of transport are all interdependent".

With Auto Africa Expo 2006 taking place at the end of October, the spotlight is falling increasingly on the growing importance of the South African automotive industry in the overall South African economy. A number of important industry-related conferences will take place during Auto Africa's Motor Industry Week that will provide a platform for stakeholders to discuss and find solutions to the challenges facing the automotive industry.

"In general, the automotive industry sees issues such as public transport, traffic congestion and the road versus rail debate not just as challenges but as opportunities to strengthen the role the industry plays in the local economy," says Dr Niefer.

"Importantly, we also want to assist government in creating a favourable business environment for foreign investors. The truth of the matter is that local automotive manufacturing operations aren't competing against other South African-based plants but rather against plants in other parts of the world, such as in Eastern Europe and Asia," he says.

"In many cases, the local automotive market is too small to support large production facilities and a number of manufacturers therefore rely on exports to sustain their businesses. The local industry is, however, at a disadvantage as South Africa is geographically a long distance from potential markets in the Northern Hemisphere. Aspects such as the transport of vehicles overseas and the fact that it takes so much longer to reach customers in these markets, all piles the odds against South African manufacturing plants."

Minister of Transport, Jeff Radebe, recently stated that an efficient and integrated transport system is essential for the economic development of South Africa. "South Africa's 6% economic growth will be facilitated by considerable investment in rail, road, aviation and sea transport infrastructure," said the Minister. He added that the development and growth of all the relevant human resource skills will be the lifeblood of the system's sustainability in the longer term.

Dr Niefer said the automotive industry believes that the solution lies in looking at the logistics value chain in its entirety, as the different modes of transport; sea, rail, air and road, are all interdependent of one another. "The industry has to find innovative ways to optimise the whole process with regards to timing, costs and quality."
 

Government is planning to mobilise investment in excess of R25-billion for national roads from both public and private sources over the next five years.
Security of freight transported remains another concern for the industry, as any break in the supply chain costs valuable time and money. This needs to be tackled head-on.

Key bottlenecks 
The National Freight Logistics Strategy (NFLS) recently identified the key bottlenecks in the logistics system that inhibit the seamless movement of cargo, as well as the increase in the cost of doing business in South Africa. The strategy went further to define a vision for seamless logistics and identified the necessary key interventions to improve this situation. 

"As the Strategy indicated, the challenge now is to accelerate the rollout of the policy to ensure implementation of elements such as economic regulation in the rail and port environments, the improvement of rail infrastructure and the achievement of an appropriate modal split of cargo movement," says Dr Niefer. 

He cites as an example the lead time involved in getting automotive components and replacement parts through the ports-railway-road infrastructure to vehicle manufacturers. "This must be reduced significantly if the industry is to remain competitive and if we want to deliver vehicles to customers overseas within a reasonable time."

Transnet has committed to invest R41-billion in freight transport over the next five years to improve services and ensure seamless freight logistics. Transnet is also planning expansions at most of South Africa's ports, which includes major developments at Durban port, such as a R6-billion investment to improve the car and container terminals.

The National Freight Logistics Strategy figures show that the road freight industry moved about 920- million metric tonnes of cargo in 2005, representing a growth of about 200-million metric tonnes from 2004. During the same period, rail cargo haulage grew by a mere five million tonnes. 

From road to rail
The Department of Transport is making a policy proposal to migrate, where possible, certain categories of cargo from road haulage back to rail haulage. Envisaged in this policy proposal are all categories of cargo that can be considered to be heavy, abnormal, dangerous, bulk, long, threatening the environment, etc.

As part of the process, Government has announced a big infrastructure development programme across various sectors, estimated at R400-billion, including planned R134-billion investments by Eskom and Transnet in the next five years.

In its recently published discussion document on rail policy, 'Intermodal Cargo Transfer', the Department of Transport said it will work with private road haulers to harmonise operations along the supply chain in such a manner that complaints from customers are minimised and that seamless operations from point of origin to point of destination will be encouraged.
In the process, which culminated in the formulation of the Accelerated and Shared Growth Initiative for South Africa (ASGISA), government has recently identified that South Africa has some key inhibiting factors that are constraining the growth in the country's economy. 
These constraints are evident at both at the macroeconomic and sectoral levels and need targeted focus to be effectively addressed. They include a need for job creating activities; the development, acquisition and retention of skilled personnel; ensuring sufficient amounts of resources, input sector focus on supporting economic growth sectors; reduction of input costs; regulatory environment constraints; and Government-specific organisational and delivery capacity, among others.
Security of freight transported remains another concern for the industry, as any break in the supply chain costs valuable time and money. Traffic has also increased significantly with at least an additional million vehicles going on to South African roads during the past five years. 

"This has put tremendous strain on the road infrastructure and increased traffic congestion in metro areas," says Dr Niefer. "Recent efforts by the automotive industry to reduce traffic include the creation of logistical hubs outside of major cities by which cargo is transferred from heavy trucks to smaller, more manoeuvrable delivery vehicles to take the goods into the city."
 

Rail is putting on a face of  strength but is not shaping against road at the moment. Government is gearing up to invest billions into upgrading the rail infrastructure. That’s good news for the country but could be bad news for transporters if ‘loony’ legislates its favour.

All modes of transport should be working together to maximise the economic potential of South Africa. Here trucks are loaded with light vehicles – some of which arrived by ship from overseas – to head off up-country from East London.

Made in South Africa by Mercedes-Benz - bound for Australia by ship. Interdependency of all modes of transport is what South Africa should be looking at to make us globally competitive.

Investment in roads
Government is also planning to mobilise investment in excess of R25-billion for national roads from both public and private sources over the next five years. This is over and above the more than R2- billion baseline allocations made to the South African National Roads Agency per annum to manage the non-toll national road system.

A total of R10.7-billion will be used to expand the state toll road network and a significant proportion of this total investment will be focussed on the three major metropolitan nodes to address the escalating congestion challenges. 

Government is gearing up to invest R5.4-billion in the development of access roads across the country in the next three years. A further R500-million has been secured for investment in strategic secondary roads that are critical for the movement of freight.

"This commitment from Government will go a long way in alleviating the serious infrastructural and logistical challenges the automotive industry face at the moment," says Dr Niefer. "With efficient and reliable infrastructure in place, the automotive industry will be able to compete at a more cost effective level with international plants and offer a more favourable investment environment for foreign companies.

"We are optimistic that Government is serious about implementing the much-needed upgrading and expansion. The automotive industry will continue to offer its full cooperation and is happy to collaborate with government towards the realisation of these strategies. This must remain an absolute priority."