Building a competitive logistics network to drive South Africa’s economic growth

South Africa’s G20 presidency in 2025 presents a pivotal opportunity to shape global economic discourse while addressing pressing domestic and regional challenges. The G20, which includes 19 nations and two regional blocs - the European Union (EU) and the recently added African Union (AU) - accounts for as much as 85% of the global economy and features many of South Africa’s key trading partners.

This platform not only allows South Africa to contribute to global conversations on trade, climate change, and sustainable growth but also provides a valuable opportunity to drive solutions that align with its national and continental priorities.

A critical area where global influence and domestic priorities intersect is the modernisation of South Africa’s logistics network, which plays a vital role in driving trade and export competitiveness. Despite the country's rich resource base, logistical inefficiencies are stifling potential, particularly in key export sectors like agriculture and mining, which are vital foreign currency earners. Daily losses from rail underperformance and port inefficiencies can total billions, highlighting the urgent need for infrastructure upgrades and innovative solutions. Public-private partnerships (PPPs) and long-term strategic planning are key to addressing infrastructure gaps and swiftly overcoming logistical challenges.

Operation Vulindlela, a joint initiative of the Presidency and National Treasury, focuses on accelerating structural reforms to drive economic recovery. Its goals include modernising network industries, ensuring a reliable electricity supply, improving freight logistics efficiency, reducing digital communication costs, securing high-quality water supply, and streamlining visa processes to attract skilled immigrants and boost tourism. These reforms are working, especially in the areas of visa reform and electricity stabilisation. We are also starting to see some progress in our logistics sector. However, a strong focus needs to be placed on the implementation of the Freight Logistics Roadmap in order to boost competitiveness and drive growth.

Urgency was a central theme at Wesgro’s most recent annual Business Outlook event late last year, where logistics was highlighted as a crucial driver of South Africa’s growth. Advocate Michelle Phillips, Group CEO of Transnet, pointed out the importance of creating a resilient logistics system to drive economic growth. In her address, Phillips - who has brought a fresh, proactive approach to engaging with stakeholders- detailed Transnet’s strategic plan to tackle immediate operational issues, stabilise finances, and partner with private sector players. This includes significant infrastructure investments and opening up Transnet’s rail network to third-party access to encourage competition and improve service quality.

These initiatives are designed to boost Transnet’s performance, attract investment, stimulate economic growth, and create job opportunities. To achieve success, it is imperative to make it as straightforward as possible for the private sector to step in and contribute. We need to roll out the red carpet.

Key speakers at the event, including CEO of Business Leadership South Africa, Busisiwe Mavuso, Transnet’s Chief Strategy and Planning Officer, Andrew Shaw, and Rail and Logistics Advisor to Operation Vulindlela, Jaap Van Der Merwe, emphasised the need for collaboration across the logistics value chain and upgrades to rail and port infrastructure. Industry leaders, including Dr. Juanita Maree of the Southern African Association of Freight Forwarders (SAAFF), along with representatives from the Western Cape government, the City of Cape Town, Transnet Port Terminals, and leading multinational logistics firms such as DP World and DHL, shared insights on sustainable practices and efficiency improvements.

During a panel discussion, Mavuso echoed the importance of private sector involvement in building more reliable infrastructure - such as electricity, water, and logistics to drive business success and attract investment. “If transport and logistics don’t function as they should, the economy cannot grow,” she said. Mavuso rightly noted that while the private sector can play a key role, this should ultimately lead to efficient, self-sustaining state-owned entities. She also called for streamlined processes to facilitate public-private partnerships, describing current procedures as overly complex and burdensome.

Key Strategic Opportunities

At the event, Wesgro and SAAFF launched the Business Outlook on Logistics in the Western Cape, a report evaluating the region’s logistics sector. Western Cape ports, particularly Cape Town’s, are vital gateways for imports and exports, handling substantial volumes of containerised and bulk cargo. Improving their efficiency is crucial for the broader economy.

The report notes growth opportunities, with a particular focus on the rapidly expanding air cargo segment, which provides businesses with faster market access compared to ocean freight. However, it also addresses key issues such as port congestion, underinvestment in infrastructure, and rising operational costs in the face of global supply chain disruptions. To tackle these, Transnet plans significant investments to upgrade and expand South Africa's ports and rail systems.

Transnet’s eight-point plan aims to transform Cape Town into a world-class port hub by optimising operations, minimising weather-related delays, and improving truck operations. With upgraded terminal equipment, the port aims to offer faster, more reliable services.

However, it’s important to note that South Africa’s logistics sector has historically operated under a public monopoly, leading to inefficiencies and high costs due to limited competition. To drive efficiency and attract investment, there is an urgent need to open the sector to private stakeholders through options such as open-access models, concessions, and joint ventures. The Business Outlook report highlights that introducing competition could streamline the logistics network, improve service delivery, and lower costs, aligning South Africa with international best practices. In this context, Transnet’s decision to engage private partners in the operation and maintenance of rail services is a positive and timely development.

Creating a competitive environment can drive greater efficiency, improve service quality, and build a more resilient logistics network. These improvements will not only boost trade but also contribute to the overall strengthening of the economy, facilitating growth and greater integration into global markets.

Incorporating automation and digital platforms can further optimise logistics, cutting costs and boosting efficiency across the supply chain. Ports like Rotterdam in the Netherlands and Laem Chabang in Thailand demonstrate the impact of digital transformation. For instance, Rotterdam’s fully automated Nextlogic terminal optimises container scheduling and reduces idle time, increasing efficiency by up to 20%.

Adopting similar technologies at the Port of Cape Town could boost performance and reduce reliance on outdated equipment. Improving road and rail connectivity is equally crucial, enabling more efficient inland logistics and unlocking the broader economic potential across South Africa’s vast landscape.Aligning with the global trend toward green logistics is another strategic opportunity.

By prioritising sustainable and innovative practices, South Africa can become a leader in forward-thinking logistics, attracting investment. As noted in the Business Outlook report, sustainability is critical to meeting emissions targets and staying relevant in global supply chains. Companies embracing green logistics can lower their carbon footprint and tap into markets increasingly influenced by environmental priorities.

Achieving breakthrough economic growth requires urgency, collaboration, strategic investment, and innovation. South Africa has the plans and commitment to develop a world-class logistics ecosystem that can accelerate economic growth and position the country for success on the global stage. But success depends on swift, decisive action. As Western Cape Premier, Alan Winde, aptly noted during his opening remarks at the Business Outlook event: “It’s about action, and it’s about urgency.”

As South Africa takes on the G20 presidency, tackling its domestic logistical challenges presents a dual opportunity. On one hand, it offers a chance to advance the country’s economic priorities, such as strengthening trade relationships with key global partners. On the other, it positions South Africa to lead by example in addressing infrastructure hurdles that affect much of the African continent.

The potential for growth is undeniable - what’s needed now is to translate that potential into tangible results.

Wrenelle Stander is CEO of Wesgro, the official tourism, trade and investment promotion agency for Cape Town and the Western Cape.