Transforming Trade Challenges into Opportunities

The global economy relies heavily on stability. When that stability diminishes, businesses must evolve or face extinction. South Africa is focused on two main objectives: reinstating a degree of predictability through engagement with the United States while also forging international partnerships and establishing the foundational infrastructure necessary for competitiveness in global trade.

President Cyril Ramaphosa articulated this perspective compellingly last week at the United Nations General Assembly. In his address at a South Africa-USA trade and investment dialogue, he delineated specific objectives for our relationship with the US: to sustain and enhance trade flows, maintain the competitiveness of our companies, and ensure that both countries’ workers and consumers benefit from this partnership.

Read: Turnarounds at Eskom and Transnet not yet reflected in GDP figures

The actionable steps he proposed are significant. A South Africa-US Trade and Investment Forum is planned to coincide with next year’s annual investment conference. The US Chamber of Commerce will assume the B20 chairmanship from South Africa, creating another avenue for collaboration aimed at enhancing trade relations. These initiatives have the potential to yield substantial mutual benefits.

However, Ramaphosa also acknowledged an uncomfortable reality.

Unprecedented trade policy uncertainty is severely impacting the global economy, with notably negative repercussions for development. The US remains our second-largest trading partner, following China.

Yet, prevailing tariff policies compel countries like South Africa to diversify risk by exploring new markets.

As the president pointed out at the Council on Foreign Relations, South Africa is diligently upgrading its trade relations globally. This is an economic imperative. We hope Ramaphosa’s message resonated clearly with his US counterparts.

Read: We’ve entered the age of zombie tariffs that never disappear

Those of us in business cannot afford to wait for political resolutions. The immediate challenges are palpable. We have seen companies announce layoffs as they halt production lines. However, we must concentrate on the opportunities we can unlock in new markets and through effective structural reforms.

This brings us to our most pressing domestic trade concern: logistics. Last week’s World Bank and S&P Global port rankings once again placed South African ports among the least efficient globally. That news stings, but it overlooks the transformation already taking place.

The rankings are based on outdated data that fails to capture the recent performance of our complex port systems. Current metrics indicate that our container ports are on track to meet 2025/26 targets for units shipped. Despite being ranked last among 403 ports in the World Bank report, Durban is now aligning with global benchmarks. Handling times, measured from the moment a customer’s container is lifted off a vessel to its delivery at their facility, have plummeted from 21 days to just two days since 2023. This isn’t merely an improvement – it represents a fundamental shift in trading costs.

Read: South Africa hopeful that US trade pact Agoa will endure

Beyond ports, the overall logistics landscape is improving. Rail volumes have risen by 15%. Border post queues have been reduced by 83% during peak times, despite a 13% increase in the number of vehicles processed daily. Together, these advancements mean significantly reduced trade costs for South African firms. These accomplishments are a testament to the collaborative efforts of business and government through the National Logistics Crisis Committee.

The president’s initiatives might lower tariff barriers with the US. Even if they don’t, we are mitigating the effects through new global partnerships and logistical enhancements. However, more action is required domestically to increase competitiveness and transform trade into a job-creating engine once more.

While Transnet’s performance has improved, the Auditor General reported that over 60% of recovery plan milestones were not met in the previous financial year.

Improvements in rail are commendable but still lag behind targets, with expectations of a 5% shortfall this year.

A significant development occurred in August: eleven train operating companies, including Transnet Freight Rail, were selected to manage routes across the network. This will introduce significant competition and is expected to drastically enhance service levels. I hope contracts are finalized quickly, enabling the operation of the first privately run trains soon.

Ports require similar strategies. Concessioning port infrastructure will bring in competition, enhancing service levels and lowering costs. Unfortunately, progress has been sluggish in this area, with the concessioning of the Durban container port entangled in litigation and delays in presenting other private sector opportunities due to the extensive analysis needed for the unexpectedly high volume of responses received. Substantial reforms are needed at the ports, and tangible changes must be implemented to attract private sector investments and participation.

US trade tariffs have proven detrimental. Nonetheless, I am optimistic that advancements in logistics and proactive market engagement are paving a better medium-term outlook, even as we navigate through immediate challenges. This exemplifies our capacity as South Africans to collectively tackle crises and emerge stronger.

The groundwork we are laying today – enhanced ports, competitive rail infrastructure, diversified partnerships – will benefit us regardless of future political shifts.

Busi Mavuso is CEO of Business Leadership South Africa.

Follow Moneyweb’s in-depth finance and business news on WhatsApp here.