Page 138 - Risk Report 2024

1. Functional State 2. Politics

Transport infrastructure is crucial for a functional SA economy, Political uncertainties influence trade volumes and flows
as a large portion of people and product movement depend in import and export logistics. Sector adaptation is limited
on State monopolised port, rail, or pipeline services. Poorly by inadequate investment. Policies related to sustainable
maintained infrastructure causes increased costs, delivery transport practices, infrastructure development, trade
delays, and inefficiencies and inadequate maintenance regulations, taxation, and investment incentives (in road, rail,
results in congestion, accidents, and disrupted supply chains. air, and port infrastructure) can improve the efficiency and cost-
Insufficient modernisation and technological advancement effectiveness of transport networks. In coalition governments,
hinder the sector’s ability to keep up with growing demand, e.g. decision-making can cause delays or policy implementation
outdated traffic management systems lead to traffic jams and changes affecting infrastructure projects and trade agreements.
inefficient cargo handling. Alternative air, road transport and Disharmonised international relations affecting bilateral or
ports used in lieu of reliable public services are not sustainable multilateral agreements can hamper cross-border movement
in the long-term. Private entities support SOEs to become more through inconsistent customs procedures. Geopolitical
customer-centric and cost-competitive in new PPP models freed tensions and sanctions can disrupt supply chains, necessitate
from corruption. Diversified supply chains (for raw materials, rerouting to avoid high-risk/conflict areas, and impact the flow
components, and finished goods), supported by collaborative of goods through key transportation hubs. National policies
communication channels, spread risk across various suppliers should prioritise risk assessment, regulatory frameworks,
and locations and reduce dependencies, especially in areas of investment in resilience, and PPPs. Coalition politics should
political instability or erratic weather that can disrupt supply focus on speedy decision-making, cross-border cooperation,
chains. and policy coordination. Diplomacy, multilateral agreements,
and cooperation should primarily aim to resolve geopolitical
impacts.

3. Economy 4. Social Security
Economic challenges adversely impact international trade, and local Thousands of employees (and their extended families) are
and international customers. Supply chain disruptions, inventory subjected to domestic realities, with increased pressure
buildups, production slowdowns, increased costs, lost revenue, job on their employers in the sector. Although the sector has
losses, and bankruptcies can limit access to markets, countries, traditionally paid attractive wages, increasing costs and
and regions, and severely harm the economy. Challenges in the decreasing productivity pressure wages and employment. The
sector contributed to SA having lost its status as main gateway into sector actively drives economic transformation, but structural
Africa, which will continue to affect foreign earnings for African deterioration (e.g. unemployment, underemployment, low
countries relying on primary commodity exports, reducing spend
on development areas (e.g. healthcare, education) and foreign wages, fragile contracts, erosion of worker rights) remains
investment. Economic challenges (e.g. high inflation, currency problematic and ultimately leads to reduced buying power
fluctuations) affect prices of goods and services, lead to altering impacting the demand of goods to be transported, with an
spend pattens and affect the earnings of sector players. The sector adverse ripple impact on sustainable employment in the sector.
must implement advanced technology, improve payment systems,
diversify supply chains, and explore alternative trade routes to avoid
bottlenecks, improve efficiencies, and reduce costs. Automated
stacking cranes and real-time tracking systems can streamline
operations and reduce manual labour. Digitalisation of documentation
processes can reduce paperwork and speed up customs clearance.
Collaboration between governments, private players, international
organisations (such as UNCTAD), and PPPs can finance infrastructure
projects to resolve common challenges. Resilience measures (e.g.
stockpiling, redundant capacity) can mitigate disruptions caused by
economic decline.

5. Rule of Law 6. Water
Crime is prevalent in the sector and impacts it severely, Escalating water shortages caused by drought and poorly
including services provided to its customers. Vandalism, cargo maintained infrastructure impact operational efficiencies
theft (during transport and when in storage), cybercrime, and infrastructure projects negatively, with sector employees
invoice fraud, corruption, bribery, kickbacks, embezzlement, severely affected. Where sector operations are dependent
and organised syndicates targeting logistics hubs and routes on water supply, own infrastructure and services have been
result in increased costs, financial losses, reputation damage, established at increased cost, while alternative water sources
legal consequences, and operational disruptions. Vandalism such as desalination and boreholes are being pursued. Water
of vehicles or facilities disrupt operations and incur repair awareness programs (for use and conservation) may have some
costs. Cybercrime targeting systems or databases compromise benefits.
sensitive information leading to data breaches or operational
disruptions. The sector invests heavily in physical security
measures such as surveillance systems, secure parking facilities
for trucks carrying valuable cargo, cybersecurity protocols to
safeguard digital assets, and employee training on security
awareness practices.