SA's logistics industry battles to regain momentum amidst Covid-19

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Global container imbalances, port congestion and poor efficiency have taken their toll, and the hoped-for bump in cargo traffic after the "hard" level 5 lockdown was lifted did not materialise. February 2021 proved to be a much-improved month for air cargo, as the public started to adopt more positive sentiment towards flying both domestically and in Southern Africa.

However, SAAFF warns the short-term outlook is not expected to improve while the operational curfew persists, even if the medium-term outlook looks slightly better.

One of the hardest-hit areas has been road freight. As documented in the media and industry publications, severe cross-border transit delays were experienced on the North-South corridors. According to SAAFF, in one week in February, the average cross-border queue time at Beit Bridge averaged 19.6 hours, costing the industry an estimated R450-million.

The air, sea and road freight environment has been extremely challenging for logistics companies, to be sure. Despite these circumstances, they have found a way to not only maintain operational standards but pursue new ways of thinking to deliver to clients.

Skill investment needed

One of South Africa's logistics bodies, Bidvest International Logistics (BIL) has been successful in negotiating the turbulent waters of the pandemic thanks to its approach of limiting wastage. From top management down, everyone in the business has taken a ‘hands-on’ approach to ensure that nothing is left to chance and stakeholders are engaged every step of the way. The result is that aspects like loading and delivery times and payloads are always accounted for.

"There are solutions in the detail," said Marcus Ellappan, the director of road freight for BIL. "You’ve got to look at the low hanging fruit and getting quick wins like saving on fuel costs. Ask if you getting the best fuel consumption? Are you getting the best deal on fuel purchases?

"Investing in skills is a no-brainer. The returns are exponential with a skilled workforce. You also need to engage, engage and engage with clients. You need to understand their business and look for win-win scenarios."

He said a lot of waste occurred in supply chains simply because there was a lack of engagement. He also recommends automating manual tasks where possible. "This creates a fresh look to business and also eliminates conventional methods of doing things."

Online purchase migration essential

The United Nations Conference for Trade and Development (UNCTAD) notes that in 2020 there had been continued migration towards e-commerce, with online purchases increasing by between 6% and 10% across product categories. This fact is not lost on Ellappan, but a balance between benefitting from e-commerce and exercising vigilance needs to be struck.

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"We envisage a lot more e-commerce platforms for booking vehicles popping up, but one needs to be wary of some of these platforms," he said. "Without the correct compliance, this could result in more road freight incidents which include crashes, hijacking, unfair labour practices and uncompetitive transport rates which does not level the playing fields from a compliance perspective.

"While leveraging off technology is definitely the way to go, road freight has many variables that need to be managed legally. These platforms should not focus on mainly booking the 'cheapest' hauler."

BIL’s international logistics director, Bruce Thoresson, readily acknowledges Covid-19 initially brought immense confusion and uncertainty, but as he points out, "you can’t press pause on an international supply chain".

"The traditional way of running a logistics business within an office environment has changed to operating remotely and off-site. This change was forced on us with some challenges in connectivity and processes being experienced, but also provided some savings in paper usage, for example," he said.

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"The change also created additional benefits through the introduction of more automated and/ or fewer manual processes. The adoption and further development of these changes will have extensive benefits going forward." Like Ellappan, Thoresson believes communication is key, not only in respect of clients but employees as well.

"Staying engaged with the business is critical. 'Out of sight equals out of mind' cannot apply, and a business will only operate successfully if staff are aware of what is going on and what the consequence of individual decisions are," he said.

"Less formal communication and meetings are required but short quick meetings can be held at any time of day. We introduced substantial and meaningful Covid safety protocols for staff. We relied more on the automation of work processes. We pursued savings across the business in order to offset revenue reductions as far as we possibly could. It is important to stay positive and forward-looking rather than dwelling on current discomfort and uncertainties."

It also should never be forgotten that clients had gone through an extremely difficult period themselves, and logistics companies needed to bear that in mind.

"Almost every client will have been impacted. Service providers will have to make sure that they understand their clients’ pain points, even more than before in order to provide a valued and affordable service."

Looking to the future, he said the increasing cost of freight would have an impact on purchasing patterns, and different approaches to stock holding could be entertained “even though it in itself could be a costly mitigation to such interruptions”.

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"Online purchasing will continue to grow so having a credible footprint for delivery will become crucial."

Nowhere is the effect of the pandemic more clearly seen than in warehouses.

Stephen Smith, BIL’s director of warehousing, has been at the coalface and has noted with concern reduced product volumes, clients no longer willing to give increases, and bulk orders being reduced to more frequent smaller orders. But like his colleagues, Smith and his team have risen to the challenge through better planning, putting in longer working hours, and enforcing stricter adherence to service level agreements.

"The market has shrunk hence there is a requirement for smaller orders. But I do believe that after Covid has left us, there will be a gradual return to pre-Covid volumes. It may take at least two years," Smith said.

For Smith, it has been vital to retain existing customers and keep them happy. But BIL has also managed to rely on loyal employees who have fully bought into the ethos of reducing wastage and costs.