Those many transporters who had their trucks stuck at border posts for sometimes up to three to four days during the Level 5 and 4 Covid-19 lockdown phases, will warm towards this story where all four speakers at a recent webinar hosted by the Southern African Transport Conference (SATC) were unanimous in their message that unlike anything before it, the Covid-19 pandemic has underlined the importance of harmonising legislation governing the transport of goods across borders.
The webinar explored Covid-19’s impact on freight and logistics and was addressed by Transnet Group Chief Executive, Portia Derby; TradeMark East Africa Senior Director of Transport, Abhishek Sharma; and International Road Transport Union (IRU) senior advisors Jens Hügel and Kazeem Asayesh.
The view of every speaker was that harmonising the legislation that governs cross-border good transit will bolster economies by reducing transport and warehousing costs and thus increase individual countries’ resilience in the face of economic crises.
“Sub-Saharan Africa has taken several hard knocks due to the pandemic which has caused significant supply chain disruptions that have led to shortages of vital commodities such as food and medicines. Let’s not waste this crisis. Let’s build new networks and become more resilient,” said Sharma, TradeMark East Africa Senior Director of Transport.
According to Hügel, senior advisor to the IRU, the sub-Saharan region is not the only one to have felt the negative effects of the pandemic on freight and logistics. IRU is a global road transport organisation representing companies that provide transport, mobility and logistics services in more than 80 countries across the world.
“Globally, movement restrictions, health screening and border controls and closures – put in place to ward off the virus that causes Covid-19 – have led to an estimated 18% average decline in annual turnover for goods transported by road,” Hügel said, adding that the Asia-Pacific and Middle East-North Africa regions are the worst affected, with a 21% drop in turnover.
“Harmonised legislation could reduce delays and save livelihoods, without endangering lives,” he said. “Instead, ever-changing and often conflicting health and safety rules at borders in the sub-Saharan region have led to heavy delays, especially at road borders. In turn, this has led to increased costs and supply shortages.”
Hügel’s contention on harmonising cross-border legislation was supported by Sharma, who said increased health and safety requirements at borders, while critical, have led to significantly longer delays in cross-border trade in the East African region and in its international trade.
“At Malaba, on Kenya’s border with Uganda, there was a 60% increase in transit times in April 2020, despite an average 50.4% decrease in import truck numbers and an average 55.45% decrease in export truck numbers that month.
“These delays have a knock-on effect on the region’s gross domestic product (GDP) because they contribute to dramatic contractions in cross-border and regional trade. They erode the region’s competitiveness by making it very difficult for exporters to commit to deadlines, and increase logistics and storage costs,” said Sharma.
He added that the region stands to lose some of the impressive gains in GDP growth it has made since 2005 and warned that this momentum could be lost if the Covid-19 pandemic leads to a long-term decline in GDP.
“This, in turn, precipitates a decline in maintenance on the infrastructure that is already in place – and to lower infrastructure investment in the future. This is of concern as it is infrastructure investment that has led to the GDP growth. Harmonising legislation could mitigate further decline by reducing delays, thereby improving competitiveness,” he said.
He cited a practical example of the positive effect harmonisation can have as being an agreement between Kenya and Uganda to accept each other’s Covid-19 test results which have sped up transit times.
The IRU’s Asayesh said there is no reason for any region to spend time coming up with rules for cross-border goods transit when there are already existing UN rules used in 76 countries which fall under the United Nations Convention on International Transport of Goods Under Cover of Transports Internationaux Routiers Carnets (TIR).
The TIR, which requires no person-to-person contact or on-paper documentation, is the only global transit system that enables goods to be shipped from a country of origin, through transit countries to a country of destination in sealed load compartments controlled by customs via a multilateral, mutually recognised system.
“The system uses information technology tools and requires only limited physical checks at borders, which reduces customs officials’ potential exposure to viruses. Using it smooths trade and it would be a benefit to the sub-Saharan region,” said Asayesh.
Transnet Group Chief Executive Portia Derby said one positive effect the Covid-19 pandemic has had is to speed up the state-owned South African transport and logistics company’s move to digital documentation.
“The greatest challenge the pandemic poses for Transnet – and South Africa – is that it has dampened the United States economy. An expected slump in US consumption is anticipated to lead to depressions in Asian economies and so to less demand for the raw materials that make up a large part of South Africa’s exports to Asia.”
However, when Transnet realised earlier this year that Covid-19 was going to negatively affect global markets, it consulted with contacts in Hong Kong and quickly established a Covid-19 command centre to help it weather the storm. Derby said the command centre has proved so useful that Transnet wants to make it permanent.
She agreed that harmonising legislation governing cross-border and intra- and inter-regional trade would be helpful.
In 2018 a South African delegation visited the IRU to discuss the benefits of the TIR system. Now all that is needed is a “champion” of the system in Africa. Could this be South Africa, which leads the African Union this year?