The survey breaks down logistics costs into transport costs, inventory carrying costs, storage and port costs, and management and administration costs finding that based on an increase of 6.9% in logistics costs compared to the previous year’s R317 billion, 2008 costs are at its lowest since 2004, totaling R339 billion or 14.7% of GDP. However, when compared to other countries’ logistics costs, domestic costs remain too high.
During 2008, the recessionary global oil price positively impacted industry costs, whereas South Africa’s higher-than-normal transport demand and poor network configuration, rising bad road conditions, radically increased storage and inventory costs, need for increased funding to bolster capacity and consistently increasing road corridor traffic had a negative effect. The percentage decrease of bad to very bad national roads over a 10 year period from 1998 to 2008 varies from 7% to 9% and on secondary roads from 8% to 20% with significant deliveries routed via this road network. The deterioration of road quality can and will lead to drastic increases in vehicle maintenance and repair costs – higher product and logistics costs – unless addressed adequately and quickly.
However, South African companies need to have a common objective to alleviate the pressure on the road system and to bring back to rail the commodities and containers that are suitable for rail transport. It is essential that rail centric products involving commodities such as coal, iron-ore and manganese remain on road more so than what is currently the case. However, it important for the road and rail sectors to complement each other. There has to be an optimum split between these two modes of transport and those commodities like coal and iron-ore should not be transported on road, as this is destroying South Africa’s infrastructure. Furthermore, solutions need to be found that optimise South Africa’s end-to-end supply chain, including the way that South Africa’s rail, road, inland terminals and ports complement each other to compete as a whole against other global supply chains. However, based on the findings of the annual 6th State of Logistics™ survey Transnet's multibillion-rand investment plan is inadequate in creating rail capacity and therefore requires private investment to achieve sustainable logistics. The challenge however remains and although consensus exists around issues such as regeneration and use of rail capacity, not enough has been done yet. The competitiveness and sustainability of South Africa’s logistics system remain at risk and moving from consensus to action is long overdue. Abrie de Swardt, Marketing Director, Imperial Logistics
The 6th survey can be downloaded at www.imperiallogistics.co.za/sol |
