August 2023 | BUSINESS FLEET AFRICA
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Table 1 Change in Ctrack Transport and freight Index in June 2023
Percentage change between
Rail
Road
Pipeline
Sea
Air
Storage and
handling
Ctrack Freight
Transport Index
June 2023 vs June 2022 (y/y)
–9.2%
12.0%
–11.5%
–0.5%
–4.7%
10.8%
6.5%
June 2023 vs May 2023 (m/m)
–2.1%
–1.6%
0.1%
0.4%
–2.6%
7.4%
–0.5%
Quarter to June 2023 vs. Quarter to March 2023 (q/q)
–4.3%
–1.1%
2.9%
1.5%
0.4%
25.8%
1.4%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.
Source: Ctrack and economistscoza, TNPA, StatsSA, SARS, N3 and N4 toll concessions, ACSA, ACOC, IATA.
Freight Index Road Freight sub-sector
actually declined on both a monthly
and quarterly basis in June. Given its im-
portance, the sector will surely bounce
back. According to the Road Freight
Association (RFA), trucks carry around
80% of goods in and around the country,
but recurring incidents of violence and
destruction continue to damage the
sector’s reputation. The RFA warns that
those who use South Africa as a transit
hub into Africa might turn away from
us and move to other countries that are
safer and more efficient.
The Rail Freight sub-sector also
subsided further in June, after having
recovered notably in February and
March (though of an extremely low
base). The sub-sector remains deeply
in negative territory on an annual
basis, declining by 9.2% year on year
in June 2023, the 15th consecutive
decline recorded and confirming that
rail remains firmly on the back foot.
Transnet Freight Rail’s woes have been
a major hurdle in South Africa’s road to
recovery, costing the mining industry, in
particular, tens of billions a year in lost
exports, which also impact negatively
on the fiscus given reduced tax receipts.
The sub-sector is in urgent need of a
turnaround strategy.
The Sea Freight component, one
of the sub-sectors hardest hit by the
Transnet strike in October 2022, is still
in an uninspiring recovery phase. While
both container handling and other
cargo handling increased during June,
the Sea Freight subsector increased by
a mere 0.4% on a monthly basis and
slipped into negative territory again
compared to levels of a year ago (-0.5%
y/y). Given the ongoing underperfor-
mance of South African ports, the fact
that Transnet has started to embrace
the private sector as a partner for
service delivery is indeed welcomed
and could be a game changer for
ports’ efficiency and performance.
In a ground-breaking development,
Transnet has selected International
Container Terminal Services Inc (ICTSI),
a logistics firm based in the Philippines
with an extensive international
footprint, to upgrade and operate a
container terminal in Durban. ICTSI will
run the Pier 2 container terminal for the
next 25 years, with an option to extend
it to 30 years.
Pier 2 is the largest container termi-
nal in the Durban port, with a current
installed capacity of 2.2 million 20-foot
equivalent units (TEUs). But this in-
stalled capacity is not being used owing
to inefficiencies. Currently, the terminal
has an average volume throughput of
1.8 million TEUs a year. Inviting private
sector involvement spurs hope that the
demise of Transnet could be stemmed,
and if the involvement could be broad-
ened to include other ports and the rail
network, it could indeed transform the
logistics sector for the better.
The Air Freight sub-sector of the
Ctrack Transport and Freight Index,
which turned out to be one of 2022’s
star performers, has been under
pressure during the first six months of
2023. Air Freight declined by 2.6% on
a monthly basis in June and remained
4.7% below a year earlier. It is clear that
strain on the global economy is still
filtering through to air cargo activity.
According to the International Air
Transport Association (IATA), lower de-
mand for air cargo is still evident across
the globe. Air cargo tonne-kilometres
(CTKs) to Africa was down by 2.4% in
June, while cargo load on planes also
declined by 1.3%, the third consecutive
month of declines. The number of
unscheduled flights typically chartered
for cargo purposes also declined again
in June.
The transport of liquid fuels via
Transnet Pipelines (TPL) increased by
a marginal 0.1% in June 2023, with
the pipeline component of the Ctrack
Transport and Freight Index now mod-
erately up on a quarterly basis (+2.9%)
but remaining in negative territory on
an annual basis, with growth of -11.5%
recorded.
The Storage and Handling sub-sector
of the Ctrack Transport and Freight
Index was the star performer in
June, with a notable increase of 7.4%
compared to May, while tracking 10.8%
higher on an annual basis. A notewor-
thy increase in shipments contributed
to the healthy growth, while issues in
the rail and road freight sub-sectors
could have spilled over in higher
inventory levels, supporting storage
and warehousing activity.
Ctrack TFI and GDP growth
The transport sector was among the
top three sectoral performers in Q1
2023, growing by 1.1% compared to the
previous quarter seasonally adjusted (vs.
0.4% for the total economy), contribut-
ing positively to the overall economic
performance of the South African
economy. Despite the moderation in
June, the Ctrack Transport and Freight
Index is still tracking 1.4% higher in
June compared to March, indicative of
a positive contribution to the second
quarter GDP. The economic narrative
remains generally dismal, dampened by
ongoing load-shedding, elevated interest
rates, a lacklustre job market and low
confidence levels. However, indications
that some industries have become
progressively more resilient to the
effects of load-shedding, as companies
reduce their energy dependence on
the embattled Eskom, is an underlying
positive development that supports an
otherwise dismal story. BFA