ERNST VAN BILJON: Brics trade winds blowing SA towards regional logistics leadership

The recent expansion of the Brics economic bloc, welcoming influential new members such as Saudi Arabia, the United Arab Emirates and Egypt, has significant implications for global trade and presents a unique opportunity for SA, especially in the context of looming trade wars.

As the landscape of international commerce realigns SA, a founding member of Brics, finds itself at a potential crossroads. Can the nation leverage its inherent geographical advantages to position itself as a crucial global logistics hub within this evolving framework?

SA's geographical position, historically significant since the establishment of the first Cape trading post at the confluence of two oceans, continues to hold compelling geopolitical and trade importance today. It offers a natural trade gateway connecting the burgeoning economies of Asia with the vast potential of the African continent and the growing markets of South America.

This unique positioning could allow SA to act as a vital transit point for goods flowing between these regions, facilitating smoother and potentially faster trade routes. The expanded Brics, with its increased economic clout and widespread geography, further amplifies this potential. Imagine goods from China destined for Brazil passing through SA ports, or resources from South America finding their way to African countries via SA infrastructure.

However, the path to realising this ambition is far from smooth. SA grapples with huge challenges that now its ability to function as an efficient global logistics hub. Poor infrastructure, including ageing road and rail networks, creates bottlenecks and increases transit times. Port inefficiencies, often plagued by congestion and operational issues — just from the volume of SA trade — add to the cost of trade and reduce competitiveness. The well-documented struggles of state-owned rail and port operator Transnet further worsens these problems, affecting the reliability and capacity of the country’s transport backbone.

These challenges are not insurmountable and the Brics expansion could be the catalyst for much-needed investment and growth in SA’s logistics sector. The increased trade volumes anticipated within the expanded bloc could incentivise both domestic and international investors to divert capital into upgrading and expanding SA’s infrastructure. Targeted investments in modernising ports, developing efficient rail links and improving road networks are crucial to unlock the country’s geographical potential.

Furthermore, the focus on intra-Brics trade and economic co-operation could provide SA with preferential access to funding and expertise from fellow member nations. Collaborations on infrastructure projects, technology transfer in logistics management and the sharing of best practices could help SA leapfrog some of its current limitations.

A critical area requiring focus is the development of digital infrastructure and the adoption of smart logistics solutions. SA lags behind some Brics partners, such as China and India, in deploying technologies such as AI, the internet of things and blockchain for customs processes and port automation. Partnering with these nations can provide crucial impetus in these areas, enabling SA to improve efficiency and streamline operations.

Realising SA’s potential as a global logistics hub hinges on several priorities:

• A clear and well-funded infrastructure development road map is essential, encompassing upgrades to ports, railways and roads, with public-private partnerships (PPPs) playing the central role in attracting necessary investment and expertise.
• Enhancing port efficiency through addressing operational bottlenecks, investing in modern equipment and streamlining customs procedures is critical to improving turnaround times and reducing costs.
• Urgent attention must be given to restructuring and strengthening Transnet to ensure a reliable and efficient national rail and port network. Furthermore, fostering a business-friendly environment through a regulatory framework that encourages investment in the logistics sector and minimises bureaucratic hurdles is crucial.
• Investing in training and education programmes to develop a skilled workforce in logistics management, port operations and related fields is paramount to long-term success.

The burgeoning Brics trade shift offers SA a golden opportunity to become a global logistics hub, a prospect that ignites exciting avenues for marketing professionals. As goods increasingly flow through the nation, strategic marketing will be essential to attract businesses to SA's evolving infrastructure. This demands a focused effort in nation branding, showcasing SA's prime location and improving efficiencies.

Targeted B2B campaigns, leveraging digital platforms and insightful content, will be crucial to reach international logistics players. Furthermore, collaborative marketing initiatives, partnering with industry stakeholders, can amplify SA’s unified service offering. 

The expanded Brics presents SA with an opportunity to transform its logistics landscape and become a key player in global trade. This strategic importance is further deepened by the African Continental Free Trade Area, as some more developed African countries are economically well-integrated into Brics economies. SA’s development as a Brics logistics hub would therefore also serve as a crucial gateway for trade within the African continent.

While the challenges are substantial, the potential rewards are immense. By strategically addressing its infrastructure deficits, embracing digital transformation and leveraging the opportunities presented by its geography and Brics membership, SA can position itself as a vital link in the evolving global trade network, fostering economic growth and solidifying its role on the world stage.

• Dr Van Biljon is head lecturer and programme co-ordinator of MCom in supply chain management at IMM Graduate School.