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After a notable decline in the first two months of the year, the Ctrack Transport and Freight Index (Ctrack TFI) in March increased to an index level of 119.7.

This is an increase of 1.1% compared with February, and just marginally up on a year ago.

Except for two smaller sub-sectors (pipeline transport and storage, as well as warehousing) that declined, the other four sub-sectors in the index increased on a monthly basis, led by a strong increase in air freight.

Similarly, compared with a year earlier, four sub-sectors increased during March, one remained unchanged (pipeline transport) and only the road freight sub-sector declined.

The air freight sub-sector increased by 4.4% in March, following an increase of 1.2% in February, reaching the highest index level since June last year.

All the underlying data for this sector indicated strong growth in March, shows the newest TFI report.

Cargo loads on planes spiked by 50.4% compared with February, while the International Air Transport Association (IATA) also reported strong industry-wide air cargo demand, with double-digit yearly growth in cargo tonne-kilometres (CTK) for the third consecutive month.

The strong demand was championed by carriers from Africa and the Middle East.

According to IATA's latest report, growing air cargo demand is a reflection of buoyant international traffic that benefits from booming e-commerce and, possibly, but perhaps to a lesser extent, recent increased interest owing to ongoing capacity constraints in maritime shipping, among other factors.

Overall, air cargo demand appears set to continue the upward trend in CTKs that started early last year.

Furthermore, the number of unscheduled flights (flights that are typically chartered for cargo purposes) and consolidated airport flight movements also increased by 8% and 12.1%, respectively.

Sea freight remains one of the main focus areas of South Africa's structural reform efforts and some of the shorter-term interventions at ports are starting to bear fruit, notes the TFI report.

After tumbling in October and November, reflecting the inability of ports to handle cargo owing to a number of factors, the sea freight sub-component of the index started to recover in December, continuing its recovery in the early months of this year.

March was the fourth consecutive month in which sea freight recorded positive growth.

Container handling (both landed and shipped) increased by 14% in the first quarter of this year compared with the last quarter of last year, although off a low base, while other cargo, excluding cars, moved mostly sideways.

The road freight sub-sector of the index, which has grown notably in recent years and now accounts for 84.5% of all freight payload in South Africa, recorded muted growth in March, signalling that many challenges remain in the early months of 2024.

Road freight increased by 1.2% on a monthly basis in March, following four consecutive monthly declines.

This sub-sector remains the backbone of logistics in South Africa, however, it comes at a cost to the economy, as transport via road remains notably more expensive than transport by rail, states the TFI report.

"South Africa's road infrastructure is also buckling under increased heavy vehicle traffic.

"A case in point: trucks were recently forbidden to travel on the R36 Bambi-Mashishing route due to the poor condition of the road.

"Heavy vehicle traffic has since diverted to the N4 route via Machadodorp, resulting in a 47.4% increase in heavy vehicle traffic using that toll route."

The rail freight sub-sector of the TFI increased 1.2% month-on-month in March, recovering partially from a weak January and February.

Following five years of yearly declines (2018-2022), rail freight payload increased by 2.5% last year, even if off an extremely low base, notes the TFI report.

Th...

Engineering News editor Terence Creamer discusses South Africa's approach to procuring battery storage, the delays that some of the battery storage bid windows face and the likely market reaction to these delays.

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The deadline for South Africa's recently launched third battery energy storage bidding round, or bid window three (BW3), has been extended by three months to October 31, following a recent deadline extension for the concurrent second battery bidding round from April 30 to June 6.

Independent Power Producer (IPP) Office head Bernard Magoro indicated during a Battery Energy Storage Independent Power Producer Procurement Programme (BESIPPPP) briefing that the BW3 extension had been granted on May 8, following requests from prospective bidders and amid ongoing congestion in securing grid-access cost estimate letters (CELs) from Eskom.

An IPP requires a grid CEL to submit a compliant bid and is able to apply for a budget quote only once selected as a preferred bidder.

Magoro also announced a two-month extension, from six to eight months, for IPPs to achieve commercial close after the BW3 preferred bidders were selected; a milestone currently scheduled to take place two months after the October 31 submission date. Commercial operation is then expected within 24 months from commercial close.

The revision to the schedule has been made to provide IPPs with sufficient time to fulfil the conditions for commercial close in light of the fact that under the prevailing Interim Grid Capacity Allocation Rules, or IGCAR, it is taking Eskom six months to complete the processes required for advancing the CELs to grid connection budget quotes.

Despite the extensions, the IPP Office urged prospective BESIPPPP BW3 bidders, as well as those participating in other concurrent public procurement processes, not to delay too long in approaching Eskom with CEL applications, as the Eskom Grid Access Unit was currently inundated with applications for both public and private projects.

The realignment of the timeframes for BESIPPPP BW2 and BW3 follows a series of other delays to South Africa's procurement for renewable energy, gas-to-power (GtP) and storage since the resumption of public procurement in 2020, including the seventh renewables bid window, the deadline for which was recently extended from April 30 to May 30.

The resumption of public procurement followed a protracted period of disruption, precipitated when the-then Eskom leadership declared in 2015 that the utility, which is the single buyer of electricity procured through the public framework, would no longer conclude contracts with renewables generators on the basis that it had sufficient generation capacity.

South Africa subsequently experienced extreme levels of electricity disruption on the back of supply shortfalls, with rotational power cuts peaking in 2023, when Eskom implemented over 16 500 GWh of loadshedding across more than 330 days.

Besides BESIPPPP BW2 and BW3, the seventh renewables bidding round is currently under way as well as South Africa's inaugural GtP public procurement bid window.

Magoro reported that procurement programmes involving 8 231 MW of new generation and storage capacity were currently under way, against 7 335 MW of IPP capacity in operation.

A further 1 897 MW of wind, solar PV and hybrid capacity was under construction and 1 153 MW of solar PV and battery storage was expected to advance to commercial close before the end of 2024.

FIVE FREE STATE SITES SELECTED

The BESIPPPP BW3 request for proposals (RFP) is seeking bidders for 616 MW/2 464 MWh of battery projects to be equally spread, at 123 MW apiece, across five pre-selected substation sites in the Free State, including Harvard, Leander, Theseus, Everest and Merapi.

Eskom, which has selected the sites using various criteria, remains the single buyer under what will be 15-year power purchase agreements. The battery facilities will also be dispatched by Eskom as the system operator and are expected to provide not only capacity and energy but also ancillary...

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South Africa's Transnet Port Terminals (TPT) says it will continue to invest in Durban Container Terminal (DCT) Pier 2 while legal proceedings play out around its selection of International Container Terminal Services (ICTSI), of the Philippines, for a 25-year partnership at what is South Africa's largest container terminal.

Rival bidder AP Moller-Maersk, of Denmark, is contesting Transnet's selection of ICTSI, which was made in July last year, calling the award unlawful and invalid.

At a presentation to industry stakeholders in Umhlanga, KwaZulu-Natal, Transnet CEO Michelle Phillips confirmed that no date had yet been set for the hearing and described as a "worst-case scenario" one whereby the court set aside the award and ordered the State-owned entity to resume the bidding process afresh.

She indicated that such an outcome could potentially delay what is currently regarded as Transnet's flagship private sector participation (PSP) project by up to two years.

Phillips defended both the process run by Transnet as well as the award to ICTSI, saying that "as far as we are concerned the process was run in accordance with our rules" and the qualifying criteria were met.

It has been reported, however, that AP Moller-Maersk will argue that, unlike its APM Terminals, which also bid, ICTSI fell short of a solvency requirement in the tender. For its part, ICTSI, which operates container terminals in 19 countries, insists it is fully able to fund the deal off its own balance sheet.

Speaking during the same Transport Forum event, TPT CEO Jabu Mdaki acknowledged concerns that Transnet would hold back on crucial investments at DCT Pier 2 until a partner was in place.

The terminal has the installed capacity to handle two-million twenty-foot equivalent units (TEUs) yearly, but has been underperforming against that nameplate.

TPT, Mdaki insisted, was fully aware that the terminal faced equipment challenges and he reported that orders were still being placed for major equipment at the terminal and that it would continue to do so until there was legal certainty.

"We've just issued a letter of award for four ship-to-shore cranes that we require at the terminal," he reported, noting that it would take 18 to 24 months before the new cranes would be delivered.

"The reason for that is simple: we don't know what the outcome of the court challenge will be," Mdaki explained, adding that TPT had to act given that many of its cranes were operating beyond their useful lifespans and given the potential for the court action to lead to a protracted delay in completing the transaction.

TPT had secured the cranes under its recently introduced partnering strategy with original equipment manufacturers (OEMs) for various pieces of equipment, in this case with Liebherr. Mdaki said that absent the OEM framework, the delay in securing a manufacturing slot at Liebherr could have been up to 48 months in light of current market demand.

The decision to proceed was also premised on the fact that the cranes could potentially be used at other TPT terminals should the eventual DCT Pier 2 partner have an alternative approach to equipment.

"Should the successful bidder say they do not require these cranes and they are going to bring in their own equipment, we are able to redirect that equipment to our other terminals.

"If they do take them and they become part of the transaction, there is a mechanism, over-and-above the offer they have made as part of the transaction, for us to recover the funds."

Likewise, TPT was preparing to procure straddle carriers for landside operations also using its OEM strategy.

"So we are not sitting back and saying everything will only happen once the PSP partner comes in," Mdaki stressed.

Despite the PSP setback, TPT has set a target to handle 4.4-million TEUs in 2024/25 (including over 2...

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Despite a tough domestic economy undermining a recovery in new-vehicle sales to pre-pandemic levels, record vehicle exports in 2023 ensured that the South African automotive sector still managed to outperform the rest of the manufacturing sector, says Naamsa | The Automotive Business Council chief trade and research officer Dr Norman Lamprecht.

The value of vehicles and automotive components exported from South Africa last year increased by R43.5-billion, or 19.1%, from the R227.3-billion recorded in 2022, to a record R270.8-billion - taking it to 14.7% of total South African exports.

Vehicle exports increased by 47 809 units to a record 399 594 units last year, up from the 351 785 units exported in 2022, while vehicle export value increased by R46.9-billion, from R157-billion in 2022, to a record R203.9-billion in 2023.

The automotive industry's 2023 export performance also included record exports to all major regions, including the EU, Africa, Southern African Development Community and North America.

This success story flows from the pages of Naamsa's newly launched yearly Automotive Trade Manual (ATM), formerly known as the Automotive Export Manual.

The ATM also shows, however, that automotive component exports from South Africa failed to match the performance of vehicle exports last year.

According to the manual, compiled by Lamprecht and his team, automotive component exports declined from R70.3-billion in 2022 to R66.9-billion last year, mainly owing to a reduction in catalytic converter exports to the EU.

Catalytic converters are used in internal combustion engine- (ICE-) powered vehicles to ensure cleaner vehicle emissions.

The EU, and other developed economies around the world, are increasingly moving to electric and hydrogen vehicles, which do not use catalytic converters.

Lamprecht notes that catalytic converters remained the top automotive component exported from South Africa last year, despite its decline, reaching R25.9-billion, or 44.1%, of total automotive component exports, followed by engine parts, tyres, and transmission shafts and cranks.

Last year, catalytic converter exports totalled R29.5-billion, down from R34-billion in 2022.

Lamprecht says the transition to electric vehicles (EVs) is "definitely affecting" the demand for catalytic converters. However, he expects this product to remain South Africa's top component export for the next ten years.

Total South African automotive trade amounted to R520.5-billion last year, comprising 16.7% of the country's total trade GDP, up from 16.5% in 2022.

As the largest manufacturing sector in the economy, the broader automotive industry contributed 5.3% to GDP in 2023 (3.2% manufacturing and 2.1% retail).

In terms of regions, exports to the EU were again at number one, increasing to a record R147.1-billion last year, while exports to Africa, the second-largest export region, increased to a record R42.8-billion.

Germany remained South Africa's premier automotive export destination, with a record export value of R83.1-billion in 2023.

Three of every four vehicles exported in 2023 were destined for Europe and the UK.

The top exporter from South Africa was Volkswagen Group Africa.

New-Energy Vehicles

New-energy vehicle (NEV) sales in South Africa grew by 65.7% from 2022 to 2023.

Sales of battery electric vehicles increased to 929 units, up from 502 units in 2022.

The segment remained stymied, however, by the lack of more affordable models.

The share of NEV sales - by 21 brands - as a percentage of total new-vehicle sales, finally breached the 1% mark last year, increasing to 1.45%, up from 0.88% in 2022.

India and China Rising

Imports of light vehicles declined by 27 966 units, or 8.6%, from the 323 783 units in 2022, to 295 817 units in 2023, in line with a weak domestic new-vehicle market.

The top country of o...

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Electricity Minister Kgosientsho Ramokgopa denies that the prevailing reprieve from loadshedding has been "stage managed" to improve the prospects of the governing African National Congress ahead of the May 29 poll, attributing it instead to "orchestrated" engineering efforts undertaken by Eskom over the past 18 months.

Speaking during a briefing that coincided with the fortieth consecutive day of no loadshedding and amid growing societal cynicism about the timing of such supply stability, the Minister also strenuously denied that the improved performance was because Eskom was relying more heavily on the diesel-fuelled open cycle gas (OCGT) turbines that it owned as well as those operated by independent power producers (IPPs).

In April, when no loadshedding was implemented, Ramokgopa said that Eskom had spent R1.15-billion on diesel to produce 126 GWh of electricity from the Eskom and IPP OCGT turbines, representing a marked improvement on the R3.14-billion spent in April 2023 to produce 470 GWh.

Eskom had set aside R22-billion for diesel in 2024/25, having exceeded its R30-billion budget in 2023/24 by R3-billion.

Rather, the Minister attributed the improvement primarily to a recovery in the performance of the six coal stations of Kusile, Matimba, Majuba, Lethabo, Matla and Medupi, whose average energy availability factor (EAF) had recently climbed to above 60%.

"The year-to-date performance is currently at 58.99%, which is a notable improvement from the 53% EAF in the same period last year," he said, indicating that on May 1 the EAF recovered to the 65% target set by the board for 2023/24, but which had not been achieved.

The financial support provided by the R254-billion debt-relief package, he claimed, had enabled Eskom to improve its maintenance performance, by providing the certainty required for planning outages and for buying the long-lead items needed during those outages.

However, Ramokgopa acknowledged that demand was also notably lower period-on-period, supported largely by a surge in rooftop solar installations to an estimated 5 400 MW. This, too, had provided Eskom with additional space to conduct maintenance and to replenish emergency reserves.

He dismissed notions of any "correlation" between the improved performance and the upcoming election, highlighting that the Energy Action Plan was announced in July 2022, and that implementation had started in earnest well before the date of the election was promulgated on February 20.

Ramokgopa said most of the recent disruptions to electricity supply were related to a collapse in municipal distribution infrastructure, which he said was deteriorating at a rate that was faster than initially anticipated.

He said a structural financial solution was required to address the problem, which was leaving residents in certain parts of the country without power for extended periods, in some cases several months.

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The initial direct cost of placing South Africa on an energy transition pathway over the coming five years in line with its decarbonisation targets is calculated at a hefty R1.5-trillion in the Just Energy Transition Investment Plan (JET-IP).

Less visible, however, are the socioeconomic costs associated with failing to pursue the Nationally Determined Contribution (NDC) goal of reducing carbon dioxide-equivalent (CO2-eq) emissions to the lower end of the NDC range of between 420-million and 350-million CO2-eq tons in 2030.

The lower target is said to be compatible with South Africa's fair contribution to helping to cap the global rise in temperatures to 1.5°C above pre-industrial levels.

To assess these direct and indirect costs, the Presidential Climate Commission (PCC) and Cambridge Econometrics have applied Cambridge Econometrics' E3ME model in a bid to understand the trade impacts of future policy choices and the economic impacts associated with the environmental damage caused by higher temperatures.

The macroeconomic simulation model has been used in this instance to capture the socioeconomic and energy implications for South Africa under conditions where the country and the world adopt decarbonisation paths, premised on:

a business-as-usual outcome calibrated to the stated energy policies of governments, as articulated by the International Energy Agency and where no carbon border adjustment measures are implemented and no just transition funding is available for South Africa; and

a 1.5°C compatible pathway for South Africa and the rest of the world, that assumes energy system decarbonisation plans for South Africa somewhat more ambitious than the prevailing Integrated Resource Plan, as well as carbon taxation, recycling of carbon tax revenues, just transition funding and global carbon border adjustment measures.

These outcomes have been tested against four scenarios, including one where both South Africa and the rest of the world pursue business-as-usual pathways. A second scenario where South Africa pursues a 1.5°C-compatible pathway and the rest of the world remains on a business-as-usual trajectory. Thirdly, where South Africa implements a business-as-usual policy and the rest of the world a 1.5°C-compatible pathway. And fourth, where both South Africa and the rest of the world aim for the 1.5°C-compatible, or net-zero, pathway.

PCC head of climate mitigation Steve Nicholls tells Engineering News that, when climate-related loss and damage is excluded, the model shows South Africa fairing best from a growth and employment perspective under a scenario where it implements net-zero policies and the rest of the world remains on a business-as-usual pathway.

Growth would be 7.5% better by 2030 and 5.2% higher by 2040, while employment would be 0.8% and 1.5% higher for the same periods respectively. However, the associated 3°C global temperature pathway could offset those gains as the country faced more and increasingly costly extreme weather events, for example from floods and droughts.

The most economically and employment damaging scenario for South Africa, however, would be one where it adopted a business-as-usual stance, while the rest of the world implemented 1.5°C-compatible policies.

Under such a scenario, the model shows that South Africa's gross domestic product (GDP) would be 4.2% lower in 2030 and 3.9% lower by 2040 than under a scenario where the rest of the world also remained on a business-as-usual pathway. Likewise employment creation would be far weaker.

The key reason for the decline, Nicholls explains, would be the loss of exports as the rest of the world imposes carbon border adjustment measures on South Africa's higher-carbon products.

The model shows that several domestic sectors, including agriculture, construction, industry, energy, services and...

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It's easy to overlook the sheer magnitude of Robertson and Caine's (R&C's) operations in Cape Town. The company's ten boat-building factories and assembly lines are dotted across the city - from Woodstock to Paarden Island to Montagu Gardens, with the latter also housing a substantial warehouse.

Other numbers, however, make it easier to appreciate the scale of the catamaran builder, including the fact that the 33-year-old company employs more than 2 400 people, with one boat rolling off an assembly line somewhere in the city almost every weekday of the year.

For this year, that will be more than 200 catamarans.

R&C is South Africa's largest boat builder for the export market, the largest builder of ocean cruising catamarans in the southern hemisphere and one of the top three in the world, with the French its biggest competition.

A catamaran can either be powered by sail and a small engine, or by more powerful engines alone.

MD Theo Loock is perhaps proudest of its most recent accolade - the 2024 European Powerboat of the Year award for the Leopard 40 PC in the powerboat category.

New Ownership

R&C is Loock's fourth turn at the helm of a company, following 15 years as the boss of JSE-listed energy storage and automotive component manufacturer Metair.

He retired at Metair in 2020, joining R&C in 2021, following a request to do so from asset manager CapitalWorks.

R&C was founded in 1991 by John Robertson and the late Jerry Caine, reaching a new scale of operations when CapitalWorks joined the business as a strategic equity partner.

Loock's brief as the new CEO included overseeing the sale of the business and facilitating Robertson's retirement last year. (John's son, Michael Robertson, remains at the company as design manager.)

Today, R&C is owned by Vox Ventures, a subsidiary of PPF Group, an international diversified investment firm in Europe, with its roots in the Czech Republic.

The new owners have a singular ambition for R&C - that it continues to expand globally while remaining based in Cape Town.

Small Beginnings

Before Robertson and Caine started the company, Robertson built monohulls - including one used by South Africa's champion sailor Hanno Teuteberg to win the Cape to Rio race in 1993.

This gold medal attracted the attention of charter companies in the US, which asked Robertson if he didn't want to consider building catamarans.

Multihulled catamarans offer more stability on the water than monohulls, which means they are better suited to tourist activities.

"The charter market is all about comfort," notes Loock, quipping: "You don't want the children sliding off the deck."

Robertson accepted an order for ten catamarans, ultimately leading to the birth of R&C.

Today, R&C's product line-up includes sailing catamarans (42 ft, 45 ft and 50 ft) and power catamarans (40 ft, 46 ft and 53 ft).

"We have a good balance, with around 60% in sailing and 40% in power," says Loock.

More than 99% of R&C's boats find their way overseas; more specifically, the US East Coast, the Caribbean, Seychelles, Mediterranean, Asia, South Pacific and South America.

Covid-19 provided a noticeable sales boost, as customers with healthier bank balances found that they could isolate from the pandemic on boats in some of the most beautiful parts of the world, says Loock.

R&C's boats are handed over to the customer in the Cape Town harbour, where they undergo their final commissioning checks before either being sailed off by the owner or transported by freighter to their final destination.

If you ever want to see R&C's boats make their trek to water, get up between 02:00 and 04:00 when they are transported to the Cape Town harbour on specialised trucks and under metro police escort.

In essence, every boat sold by R&C is a Leopard-branded catamaran. However, they are only branded as such should ...

Engineering News editor Terence Creamer talks about the highs and lows of South Africa's real economy in the 30 years of democracy, as well as what could be done to reignite the manufacturing sector in particular.

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TransUnion Africa CEO Lee Naik says a tough economic environment characterised by cost-of-living challenges, high fuel costs and currency depreciations have resulted in a notable decline in vehicle sales and financing in South Africa.

However, while this contraction is expected to persist, manufacturers and dealerships are stepping up their efforts to help consumers enter, or re-enter the auto market, he notes.

TransUnion this week released its Vehicle Pricing Index (VPI) for the fourth quarter of 2023.

Actions that vehicle manufacturers and dealerships are taking to egg on sales numbers include discount structures, incentives, trade assistance mechanisms, interest rate reductions on loans, and a focus on monthly payments rather than gross prices.

"These efforts show innovation in an otherwise stagnant sector," says Naik.

According to the newest VPI, a significant market trend is the increase in the average loan amount for financed vehicles.

TransUnion data shows that, in the last quarter of 2023, the average loan value increased to R396 000, up from R386 000 in the same period in 2022.

This 2.5% average loan value growth comes off the back of a consumer price index of 5.1% in December, and a new-vehicle price increase of 6.3% (fourth quarter, 2023 compared with the fourth quarter, 2022).

TransUnion also reports that there has been an overall reduction in new accounts opened over the last two years, further confirming a decline in purchasing power and volume.

"The net effect of these economic markers is that lower net income consumers are being priced out of the market - they either do not qualify for vehicle loans or are unwilling to add a new debt burden to their monthly budgets."

This is where the industry is evolving to enable economic participation, says Naik.

"Consumers are benefitting from the introduction of new subscription-based and vehicle-on-demand models and services.

"Renting, station-based car sharing, free-floating car sharing, micro-mobility services, ridesharing and ride-hailing options are increasingly being brought to market to make transport more affordable for consumers, with the end-result promoting financial inclusion, furthering economic empowerment and stimulating economic growth."

The shift in the ratio of used-to-new vehicles being financed - from 1.98 in the fourth quarter of 2022 to 1.2 in the fourth quarter last year - also signifies a change in consumer behaviour, driven by factors such as improved new-vehicle stock availability, an interest rate that is perceived as being stable, and innovation at dealership level, notes Naik.

These factors are leading to consumers increasingly opting for new, rather than used vehicles.

"Overall, the macroeconomic climate remains incredibly challenging for consumers and continues to affect buying power and spending habits," says Naik.

"While the data sets in this index end in December 2024, the market indicators continue to tell a difficult story for the South African consumer - first quarter Naamsa sales figures remain depressed, and the cost of owning, running and maintaining a vehicle continue to increase, evidenced by another petrol price increase on May 1.

"The South African vehicle industry's ability to adapt and innovate, particularly in embracing new mobility trends, will be essential for sustainable growth," states Naik.