South Africa Freight Transport Report Q2 2012

BMI's projections for volume growth in South Africa's freight transport sector in 2012 are relatively bearish, sitting around the 1% mark for rail freight and throughput at the country's largest port in terms of tonnage volume, Richards Bay. Investments are being made in ports and rail infrastructure nonetheless, which will leave South Africa's freight transport sector well equipped to deal with future growth once the global economic situation improves.
Headline Industry Data
.. Rail freight growth will be just 0.6% in 2012, and will remain low, averaging 1.2%, to 2016.
.. Richards Bay Port's tonnage throughput in 2012 is forecast to increase by 1.2%. Over the medium-term we project a 1.5% average annual increase.
.. 2012 total trade growth is forecast at 6.0%, slightly down on the estimated 6.7% expansion in 2011.
Key Industry Trends
Solution Or Destitution - US$2bn South Africa To Swaziland Rail Link
Transnet and Swazi Rail's ambitious US$2bn rail link would certainly bring both direct gains - increased capacity, reduction in transport costs and a decrease in commodities prices - as well as positive externalities - job-creation, an economic boost, industries developing along the rail infrastructure. However, we also highlight the potential difficulties in terms of funding as government finances are pushed to the limit, with South Africa's construction industry's continued hangover from pre-World Cup excesses.
TFR Places Order For 43 Diesel-Electric Locomotives
Transnet Freight Rail (TFR) has placed an order for another 43 of General Electric (GE)'s Class 43 dieselelectric locomotives. The company had earlier ordered 100 Class 43 locomotives from the US-based industrial conglomerate. Based on GE's 3,300-hp C30-ACi fuel-efficient platform, the locomotives are considered the most powerful diesel-electrics in service with TFR. The company has already received delivery of the first 10, while the remainder are being constructed under license by Transnet Rail Engineering at its workshops in Koedoespoort, north of Pretoria.
New Operating System Will Help Durban Cope With Expansion
BMI believes that a dip in handling times at the Port of Durban, South Africa's primary container port, in 2011, caused by the introduction of a new port operating system, should be ironed out in 2012 as the port works in tandem with the system manufacturer to ensure the best results. While we acknowledge that the introduction of new technologies in ports can sometimes hit stumbling blocks, BMI believes that it is essential that container facilities continue to innovate if they are to compete on the world stage.
Key Risks To Outlook
Significant risks are posed to South Africa by the global headwinds facing the world economy - namely the ongoing European debt crisis and the potential of a hard landing in China. China in particular could be a real concern if growth continues to slow and the country begins to use its stockpiles of coal and iron ore, which would impact on volumes of the commodities being transported on South African rail and through South African ports.