Crypto News: Supply Lines: South Africa’s rail crisis

South Africa's rampant crime is bringing a crucial freight-rail line to a virtual halt.

Theft has crippled the Container Corridor, a 460-mile (740-kilometer) double track that moves imports to the industrial hub of Gauteng, where Johannesburg and Pretoria are located, and exports to Africa's biggest container port in Durban.

In the week to May 21, it operated at only 25% of capacity and more than 50 trains were stuck on the tracks or in yards, waiting to access the line. Sections of the copper electricity cables that power the trains had been stolen for scrap. (Read the latest here.)

The route is key to the functioning of Africa's most industrialized economy.

Related Reads:

Jet fuel destined for Africa's busiest airport, O.R. Tambo near Johannesburg, is railed north as are car parts for BMW and Ford factories. Finished vehicles due for export to Europe travel south as does coal, grain and timber. Iron ore is delivered to an ArcelorMittal plant on the route.

The disruptions "have a huge knock-on effect," said Rudzani Ligege, the managing executive for the corridor, which is run by a unit of state-owned ports and rail operator Transnet. The alternative is costly trucks on an already congested inter-city highway.

While Ligege says the situation is the worst it has ever been, it's not unusual. In the year ended March 31, theft from the line amounted to 367 miles of cable, or four-fifths of its length.

And while the Container Corridor is the worst affected, accounting for 39% of the cable theft suffered by Transnet, its other five major rail routes are also hurt. Those connect commercial centers and take iron ore, coal and manganese to export terminals at ports.

It's reached a point where the logistics firm updates the length of cable stolen across its operations daily on its website.

While Transnet is running a 20-year tender for a private company to operate the Container Corridor, and other routes may follow, investors will have to factor in the cost of security in any bids they make.

—Antony Sguazzin in Johannesburg

Key Growth Drivers | Asia will keep dominating global trade for the rest of this decade, according to a report from Standard Chartered Bank, which expects exports from the region to rise more than any other economic area through 2030. (Read the full report here.)

China's economic recovery weakened in May as manufacturing activity continued to slump, prompting investors to dump stocks and call for more stimulus measures to boost growth.
Three years ago, corporate America pledged nearly $80 billion to diversify its supply chain by granting contracts to minority-owned businesses — but money spent hasn't necessarily translated into long-term success for those companies.
Rishi Sunak won't push US President Joe Biden for a trade deal during a visit to Washington next week, the UK prime minister's spokesman said.
The US's Inflation Reduction Act is upending the auto industry worldwide as it transitions to electric vehicles, and the window for the UK to respond is closing fast.
Tesla's Elon Musk joined Apple's Tim Cook, Mercedes-Benz's Ola Källenius, and other car and technology company bosses in emphasizing the importance of maintaining ties with China.
The US accused several Chinese companies of shipping machines that make counterfeit pills to the US and Mexico, and hit more than a dozen entities with sanctions as it looks to crack down on a trade officials say is contributing to the opioid crisis.
Taiwan's de-facto ambassador to the US said the lack of a double taxation treaty is "unfair" and discouraging investment from Taiwanese semiconductor firms, while adding she hopes recent trade talks lead to a deeper deal between the two governments.

French shipping giant CMA CGM reported a steep drop in first-quarter profit and warned the slump will worsen as inflation in major economies weighs on consumer spending.
Earnings growth for North American railroads may have to wait until next year as volume might not inflect positively until the second half of 2024, Bloomberg Intelligence says.
Run SPLC after an equity ticker on Bloomberg to show critical data about a company's suppliers, customers and peers.
Use the AHOY function to track global commodities trade flows.
Click HERE for automated stories about supply chains.
On the Bloomberg Terminal, type NH FWV for FreightWaves content.
See BNEF for BloombergNEF's analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.

Don't keep it to yourself. Colleagues and friends can sign up here. We also publish the New Economy Daily, a briefing on the latest in global economics.

For even more: Follow @economics on Twitter and subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and gain expert analysis from exclusive subscriber-only newsletters.

How are we doing? We want to hear what you think about this newsletter. Let our trade tsar know.

Like getting this newsletter? Subscribe to Bloomberg.com for unlimited access to trusted, data-driven journalism and subscriber-only insights.

Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more.

Want to sponsor this newsletter? Get in touch here.