Turning Trade Challenges into Opportunities

The global economy thrives on stability, and when that stability wanes, businesses are compelled to adapt or risk disappearing. South Africa is concentrating on two primary goals: reestablishing a level of predictability through dialogue with the United States, while simultaneously pursuing international partnerships and building the essential infrastructure needed for competitiveness in global trade.

President Cyril Ramaphosa effectively communicated this viewpoint last week at the United Nations General Assembly. During his speech at a South Africa-USA trade and investment dialogue, he outlined specific aims for our relationship with the US: to maintain and enhance trade flows, uphold the competitiveness of our companies, and ensure that the partnership benefits workers and consumers in both countries.

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

The proposed actionable steps are noteworthy. A South Africa-US Trade and Investment Forum is set to coincide with next year’s annual investment conference. Additionally, the US Chamber of Commerce will take over the B20 chairmanship from South Africa, creating further opportunities for collaboration to bolster trade relations. These initiatives could result in significant mutual advantages.

Nevertheless, Ramaphosa also acknowledged a troubling reality.

Unprecedented uncertainty in trade policy is severely affecting the global economy, with notably adverse effects on development. The US stands as our second-largest trading partner, after China.

Yet, current tariff policies compel nations like South Africa to diversify their risk by seeking out new markets.

As the president emphasized at the Council on Foreign Relations, South Africa is diligently enhancing its global trade relationships. This is not just beneficial but essential. We hope Ramaphosa’s message resonated well with his US counterparts.

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

Those of us engaged in business cannot wait for political resolutions. The immediate challenges are evident. Companies have announced layoffs and halted production lines. However, we must focus on the opportunities we can tap into in new markets and through effective structural reforms.

This leads us to our most urgent domestic trade issue: logistics. Last week, the World Bank and S&P Global port rankings once again positioned South African ports among the least efficient in the world. This news stings but overlooks the transformation already underway.

The rankings are based on outdated data that fail to reflect the recent performance of our intricate port systems. Current metrics indicate that our container ports are on track to meet 2025/26 shipping targets. Despite being ranked last among 403 ports in the World Bank report, Durban is aligning itself with global standards. Handling times have drastically improved from 21 days to just two days since 2023. This isn’t merely an enhancement – it’s a fundamental shift in trading costs.

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

Beyond ports, the overall logistics landscape is strengthening. Rail volumes have increased by 15%. Additionally, border post queues have been reduced by 83% during peak times, even as the number of vehicles processed daily grew by 13%. Collectively, these advancements signify notably reduced trade costs for South African businesses. These achievements are a tribute 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 buffering the impacts through new global partnerships and improvements in logistics. However, greater action is essential domestically to boost competitiveness and to turn trade back into a job-creating engine.

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

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

A significant announcement was made in August: eleven train operating companies, including Transnet Freight Rail, were chosen to manage routes throughout the network. This move is expected to foster competition and markedly improve service levels. I hope contracts are finalized swiftly, allowing for the operation of the first privately-owned trains soon.

Similar strategies are necessary for ports. Concessioning port infrastructure will introduce competition, enhance service standards, and lower costs. Unfortunately, progress has been slow, as the concessioning of the Durban container port is mired in litigation, and the presentation of other private sector opportunities has been delayed due to the extensive analysis required for the unexpectedly high volume of responses received. Significant reforms at the ports are essential, and tangible changes must be made to attract private sector investment and involvement.

US trade tariffs have proven to be harmful. Nevertheless, I am optimistic that advancements in logistics and proactive market engagement are paving a better medium-term future, even as we contend with immediate challenges. This illustrates our collective capacity as South Africans to tackle crises and emerge stronger.

The groundwork we are laying today – improved ports, competitive rail infrastructure, and diversified partnerships – will serve us well, irrespective of future political changes.

Busi Mavuso is CEO of Business Leadership South Africa.

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