BMI's Executive Summary

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Poor South African road safety levels remained a concern in 2007. There were a string of fatal accidents throughout the first half of the year. The crashes have been blamed on careless drivers, some drunk or sleep-deprived in high traffic volumes, and on drivers in cars carrying more passengers than seatbelts. Dangerous roads are a serious constraining factor for South Africa's road haulage industry. An estimated four in 100,000 people a year die in road accidents across Europe, compared to 25 per 100,000 in South Africa, according to Arrive Alive, which monitors road safety under the auspices of the national Transport Ministry. The ministry has unveiled a plan to halve the number of fatalities from around 18,000 annually – including pedestrians struck by vehicles – in less than four years. In this latest South Africa Freight Transport Report, BMI concludes that freight carried by road in South Africa is set to increase at an annual average rate of 7.7% over the next five years, ahead of the general rate of GDP growth.

Various factors support this prediction. The outlook for both domestic economic growth and exports is encouraging. We expect the economy will grow at an annual average rate of 5.7% across the 2007-2011 forecast period, with foreign trade rising by 16.4% a year in value terms. Government policy favours resumed investment in rail freight, but this is taking time to feed through and will not act as an immediate threat to road haulage. South Africa's rate of economic expansion has been spurred by domestic consumption, investment growth and international demand for commodities. These have resulted in strong demand for transport services; buoyant consumption has maintained the need for import growth; export shipments of gold, platinum group metals, chrome, manganese and coal have necessitated increased freight services. Real GDP growth will also be boosted by South Africa's plans to foster regional expansion in southern Africa, and this entails improving and extending the transport network.

We expect road haulage to grow a little faster than GDP, although poor road quality in some areas will be a restraining factor. Rail freight will lag just behind the economy's general growth rate due to an ongoing investment shortfall, and despite current catch-up attempts. Sea freight will broadly follow GDP, supported by port-expansion plans and the current attempt to persuade shipping companies to re-flag their fleets, joining the South African merchant marine. Airfreight has expanded relatively slowly in recent years, although the expansion of low-cost carriers and an increasing focus on the African regional market should inject some extra dynamism in the forecast period. Combining all these factors, our conclusion is that total freight volume across the different modes, measured in million tonnes-km, will rise by an annual average of 7.5% in the 2007-2011 forecast period.

South Africa's overall business environment rating is above the average for the Middle East and Africa (MEA) region. It scores well in terms of political and economic factors and in its regulatory background, but its record in relation to historic and forecast growth in foreign trade and in transport remains relatively weak. By the very nature of the industry, many of the problems associated with reforming transport network, facilities and services have to be considered over a medium-term time frame.

According to our latest estimates, the total value of transport and communications GDP will rise to US$28.57bn in nominal terms by 2011, representing 8.2% of South Africa's GDP.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Grindrod Limited

Grindrod Limited SWOT

South Africa Political SWOT

South Africa Economic SWOT

South Africa Business Environment SWOT

Chapter 3 - Business Environment Rankings

Regional Overview

Table: Africa & Middle East (AME) Countries Freight Business Environment Ranking

Country Overview

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Regulatory Policy

Chapter 4 - Industry Trends And Developments

Road

Rail

Air

Sea

Chapter 5 - Industry Forecast Scenario

Economic Outlook

Table: Economic Indicators

Chapter 6 - Country Snapshot: South Africa Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education And Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Year

Transport Outlook

Table: Transport Industry Forecast

Table: Freight Turnover (domestic and international):

Chapter 7 - Trade Environment

Overview

Trade Liberalisation

Key Trading Partners

Table: Total Value of Imports (US$mn)

Table: Total Value of Exports (US$mn)

Table: Top Export Destinations, US$mn

Table: Export Trade, % y-o-y

Table: Top Import Sources

Table: Import Trade, % y-o-y

Chapter 8 - Market Overview

Multimodal

Infrastructure

Competitive Landscape: Multimodal

Company Monitor

Road

Infrastructure

Competitive Landscape: Road

Rail

Infrastructure

Competitive Landscape: Rail

Company Profiles

Air

Infrastructure

Competitive Landscape: Aviation

Company Profiles

Water

Infrastructure

Competitive Landscape: Maritime

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Sources

Chapter 10 - Appendix: Regional Demographic Data

Table: The Long View: Data Over The Economic Cycle (2000-2007)

Table: Population

Table: Household Spending Per Capita, US$

Table: Private Consumption Per Capita, US$ PPP

Table: Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Middle Eastern & African Freight Transport Sources

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BMI's Middle Eastern & African Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: