As South Africa’s logistics costs climb to record levels, businesses are under increasing pressure to contain freight expenditure. However, substantial savings can be achieved by altering distribution networks without cutting volumes or negotiating lower transport rates.
This is according to Malcolm Herbert, financial director at Sapphire, an integrated business solutions company specialising in procurement, logistics, and branded merchandise.
Herbert cites the State of Logistics 2026 report, which projects the country’s logistics expenditure will account for 14.6% of GDP this year, with transport representing approximately R686bn, or 59% of the total R1.16tn logistics bill.
To illustrate the impact of structural changes, Herbert points to a major South African retailer that reduced its stationery freight costs by 27% after Sapphire relocated its distribution centre from KwaZulu-Natal to Johannesburg, without reducing product volumes.
“This example shows how businesses can achieve meaningful savings by reviewing their supply chain structure rather than focusing exclusively on negotiating lower freight rates,” he explains.
“Many companies focus on negotiating better transport rates without questioning whether their distribution model still makes commercial sense,” says Herbert. “Yet some of the biggest savings come from rethinking where stock is held, how orders are fulfilled and how far goods travel to reach their destination. These are structural changes that can considerably reduce costs without jeopardising service or reducing volumes.”
Supply chain efficiency as a commercial priority
The potential for savings extends across the wider economy. The State of Logistics 2026 report estimates that improvements in transport choices, capacity utilisation, and operating efficiency could reduce South Africa's projected national logistics bill by approximately R149bn. While this represents a national modelling scenario rather than guaranteed savings, it highlights the financial impact of inefficiencies across the country's freight system.
For individual businesses, Herbert notes that distribution networks established years ago often fail to reflect current customer locations, order volumes, or delivery requirements. This mismatch leads to unnecessary expenditure through fragmented deliveries, underutilised transport capacity, inefficient stock positioning, and moving goods between multiple warehouses.
"Businesses need to understand the total cost of getting products from suppliers to their final destination," says Herbert. "Freight rates are only one component. Warehousing, inventory management, delivery frequency and stock availability all influence what a business ultimately spends. Reducing one cost in isolation doesn't necessarily mean the overall supply chain becomes more efficient."
He adds that procurement decisions can also carry significant downstream cost implications, particularly when purchasing, warehousing, and distribution are managed in silos.
"A purchasing decision might deliver a lower unit price but result in higher storage or distribution costs,” he says. “Unless businesses are looking at these functions collectively, they risk making savings in one area while creating additional expenditure elsewhere."
With South African businesses facing ongoing pressure on operating margins, Herbert believes supply chain efficiency must be treated as a strategic commercial priority rather than a purely operational function.
"South Africa's infrastructure constraints and rising logistics costs are challenges businesses cannot resolve on their own, but there are opportunities to improve efficiency inside their existing operations," he says.
"The focus should not only be on the cost of moving goods across the country, but also on how businesses can make better use of their existing resources. Even relatively straightforward changes to distribution networks can deliver measurable financial benefits without reducing volumes or compromising service."
