Transnet CEO expects subdued commodity prices to weigh on recovery from Covid
Mining News Pro - Transnet CEO Portia Derby warned on Wednesday that the recovery from the Covid-19 pandemic in South Africa and the rest of Africa was likely to be negatively affected by still-subdued commodity prices and the serious deterioration in public finances across the continent, which had resulted in surging debt and currency volatility.

Speaking during a South African Transport Conference webinar, Derby expressed deep skepticism over the likelihood of a strong economic rebound in 2021, arguing that such a recovery was unlikely until a safe vaccine had been administered globally on a mass scale.

Given the interconnected nature of the world economy, she anticipated that job losses in the US would affect consumer demand, which would have negative knock-on effects for production in Asia and the demand for raw materials produced in Africa.

The South African recovery would also depend on overcoming those issues that had dragged its economy into a recession even ahead of the pandemic and would also be further burdened by tight credit markets, low levels of private investment, high levels of unemployment and rising poverty.

“The challenge for South Africa is how to change the risk/reward perception,” she said.

From a logistics perspective, South Africa would also need to respond to the global race for new routes, economic zones, hubs and ‘single stops’ by positioning itself as a trans-shipment hub for the Southern African Development Community (SADC) region.

“The SADC region will be our priority as Transnet,” Derby said, adding that the North-South corridor remained an important area of focus for the group.

Some opportunities could also arise, however, as a result of the shift in focus from actions designed to limit the damage associated with the Covid-19 pandemic to building longer-term supply-chain resilience.

This could include some reshoring and stockpiling, and Transnet intended engaging with those cities in which it had port operations to discuss the implications of this “homeward bound” trend.

Transnet would also monitor the implications of the pandemic on regionalisation, which could offer nearshoring opportunities, and globalisation, particularly the anticipated trend of diversifying supply chains away from a single country to regions.

Derby stressed that, while Covid-19 and South Africa’s lockdown had been disruptive to several operations, especially its port operations, Transnet had since embedded the ‘new normal’ practices across its ports, rail, pipelines and property units, which collective employed about 56 000 people.

It had also started to demobilise the Covid-19 Command Centre it had established to sustain its essential services during the lockdown having embedded the lessons into its ongoing operational systems.

“On average we have experienced a 20% reduction in volumes . . . and the real job now is how we plough ourselves out of the reduction in growth that we all face.”