Survey highlights growth and development of regional logistics

Logistics for regional growth and development is the theme of this fourth edition of the survey, which is based on 2006 data and information. The report finds that domestic logistics costs accounts for 15,7% of the country's Gross Domestic Product (GDP), half a percentage less than the previous figure, while transportation constitutes the major component of logistics at 56,9%, an increase of 0,7%.

"Growth in trade and logistics is an on-going trend and delivering goods are increasingly becoming more expensive. As we are challenged to continuously work smarter and manage our costs, it's important to monitor our performance and putting learnings into practice," says Marius Swanepoel, CEO of Imperial Logistics.

On the road again

Since 1997 growth in transportation has predominantly been captured by road. In 2006, total land transport in South Africa amounted to 1,5 billion tons shipped, up 5,5% from 2005. This is not only a South African phenomenon, but a global trend as also reported in the 19th State of Logistics Survey based on 2007 data and released by the Council of Supply Chain Management Professionals (CSCMP). Logistics costs as a percentage of GDP was the highest at 10,1% in the US in 2007 since 2000. Internationally, it is expected that the trend will remain in 2008 with a possible slow recovery into 2009.

Seafaring

Still focusing on the world stage, seaborne trade has increased by 4,3% to 7,4 billion tons from 2005 to 2006. Volumes handled at South African ports in containerised traffic grew by 7% in 2006 and bulk exports and imports increased 6% and 4%, respectively. Sea ports are generally acknowledged as a region's economic lifeline. With growth figures exceeding that of international trade, South Africa is increasingly becoming the gateway into Africa and the region's logistics hub for international trade.

Measuring up

South Africa is ranked 24th out of 150 countries on the World Bank's Logistics Performance Index. However, based on logistics expenditure, the country is rated 124th, which can be ascribed to a number of logistics hurdles such as inadequate infrastructure and processes at our ports and borders, but it's predominantly an indication of the rising fuel costs, increased road freight and South Africa's competitiveness in terms of overland transportation. In order to improve our position, South Africa needs to evaluate its high internal logistics costs at all levels and address the issues and challenges, especially those related to inland and cross-border transportation. This is the crux of the survey.

Postive economic growth

"The growth in logistics, transportation and ocean freight underlines the positive economic development that South Africa as well as the Southern African region has experienced over the past couple of years," says Hans Ittmann, CSIR Built Environment. "In order to maintain this trend and increase our international competitiveness, we urgently need to develop our Southern African ports and rail infrastructure to handle the increased demand for freight and transportation in the most cost-effective and efficient way."

Port expansion

It is worth noting that capital expenditure has been planned for port expansions and developments as part of Transnet's overall freight logistics strategy. Within the next five years, Transnet is expected to spend some R80 billion on such developments, which is expected to significantly improve South Africa's port and rail infrastructure, while decreasing congestion on the roads in metropolitan areas. However, in the short to medium term the situation will continue to be challenging and will require intelligent solutions from logistics and supply chain managers.

Crossing borders

In addition, an increasing number of companies are expanding into Africa and are turning to third-party logistics providers to manage their logistics activities when operating across borders. The survey examines a case study that was conducted on four Imperial Logistics operating companies and a number of cross-border exporting challenges and remedies were identified. All the companies used road transport as the main transport means and border-post delays were identified as the main challenge to overcome.

Solutions proposed include standard electronic clearing systems, longer border-post operating hours, better trained personnel and improved communication between key role players.