achieved by exploring the options to improve access to and cost of the port and rail infrastructure. The paper will identify institutional, operational and policy reforms that may deliver on these aims, recognizing that any efforts to improve the efficiency of the freight logistics system must be supported by structural reforms in other key areas to have a long‐term positive impact on South Africa’s export performance.

Addressing transport costs is critical to South Africa’s export success, given the country’s global geography and the inland concentration of economic activity. While transport and logistics infrastructure have the potential to be a source of competitive advantage for South African firms, access and pricing policies, along with inefficiencies and delays in the ports and rail network, are eroding the competitiveness of exporters.

This situation is not unique to South Africa. The interventions discussed here, while tailored to the South African context, have broad applicability to other developing countries: institutional reforms to promote competition and get the prices right; private sector participation to increase investment and improve service delivery; information and coordination to address market failures and improve access; and cooperation to improve intermodal, interregional and institutional interfaces.

The remainder of this paper is structured as follows. Section 2 provides an overview of South Africa’s export performance and the role of transport costs. Section 3 explores the principal challenges identified in the port and rail network, followed in Section 4 by a discussion of the factors underlying these observed problems. Section 5 aims to learn global experiences, exploring how other countries have addressed similar issues through market‐based, operational and policy‐oriented solutions. Finally, Section 6 concludes with some implications and policy recommendations for South Africa.

# 2 Overview of South Africa’s export performance and the role of transport costs

## _2.1 Export performance_

In recent years, South Africa’s export performance has been disappointing. While the commodity boom from 2000 to 2010 translated into huge value creation for many mining countries, South Africa failed to take full advantage of the good times. China, India and Brazil recorded nominal annual growth in mining production value of at least 20 percent while Australia, Chile and the Russian Federation grew annually between 10 and 16 percent. But South Africa achieved nominal annual growth of 8 percent – which is only slightly above average inflation. Crucially, this growth was mainly from the pull of high prices rather than volume growth, which was flat (World Bank, 2014). Poor export performance has resulted in a 15 percent decline in South Africa’s share of world exports since 2011.

**Figure 1: South Africa’s export performance (2005 – 2013) and change in shares of world exports (2011 – 2014)**

<!-- Start of picture text --> 800<br>700 20<br>600 15<br>500 10<br>400 5<br>300 0<br>200 ‐5<br>100 ‐10<br>0 ‐15<br>2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013<br>Brazil Chile Hungary Indonesia<br>India Mexico Poland Russian Federation<br>South Africa Turkey<br>Export value index (2000=100)<br>China Turkey India Mexico Poland Colombia Russia Malaysia Thailand Hungary Brazil Chile Ukraine Peru Argentina Indonesia South Africa<br><!-- End of picture text --> _Source: first panel: World Bank Development Indicators and second panel: Comtrade_ _3_