The immediate prospects
for the freight industry in
all its formats are globally
considered to be pretty
bleak.
And this is likely to lead
to a rationalisation process
– with more mergers, buyouts
and takeovers just one
of the predictions of what
the future holds, according
to a selection of industry
executives questioned by
FTW.
Globally, both air and
sea freight modalities have
been hard-hit by the sudden
drop in volumes created
by lower-than-expected
levels of consumer demand
following the downturn – a
situation that looks set to
continue into the uncertain
future. So those involved in
these modes are having to
find innovative ways to stay
ahead of the competition.
“It’s a mixed bag,” Garry
Marshall, MD of Bidair
Cargo, told FTW. “A lot
depends on which trade
lanes and countries you are
focusing on. The UK, for
example, is looking good
at the present time, and
airfreight with that country
is expected to be strong.
“The world economy is
never static,” he added,
“some growing and some
taking a beating. So it’s a
tough choice.”
But on the converse side,
he bemoaned the current
rand exchange rates, which
were adversely impacting
the cost of foreign goods
and simultaneously
pushing down airfreight
imports.
On the ‘more mergers
etc’ side of things, Marshall
pointed to this being a
distinct trend in the air
express industry.
His overall feeling was
that it was all governed by
things are up, airfreight is
up. If they’re down, then
airfreight is down.”
While admitting that
seafreight volumes had
dropped off, Glenn Delve,
SA marketing director
of MSC, still expressed
optimism about the shortand
medium-term future.
“We’re holding our own,”
he said, attributing much
of this to the fact that MSC
was following the dictum
that your success depends
on the service you are
offering, both on the ocean
and the land side. “I’m also
optimistic about growing
volumes,” he added.
The key future issue
on the agenda for freight
forwarders, said a
forwarding executive, was
the impact that China now
exerted on the world trade
scene.
Pointing to a recent
international report, he
highlighted that as long
ago as 2013 this country
had overtaken the US in
annual trade in goods,
according to official
figures.
“This,” he said, “now
means that Chinese
ports and hub-and-spoke
networks are of primary
importance to global
freight forwarders, and
shipping schedules are
developed around them.”
Added to that, China
had improved supply
chain links with emerging
economies in Africa, Latin
America and the Middle
East, he said. Rising
costs were also forcing
Chinese companies to
outsource some low-skilled
and labour-intensive
production to these,
amongst other, lower-cost
countries.
And it was therefore
leveraging its alliances
with those regions and
increasing its imports from
these trading partners
to support its own
infrastructure projects.
“Logistics service
providers (LSPs),” he said,
“have begun to gear up
for increases in future
shipment volumes going
the other way.”
On the road freight
side, it has to be
recognised that it is almost
impossible for the supply
chain to keep moving,
either domestically or
internationally, without
using the road network,
according to Carl Webb,
specialist in abnormal
road transport and MD
of Project Logistics
Management (PLM).
“But business is down for
sure,” he said. “However,
while the markets are bad,
the signals are good.
“Guys in the likes of
Zambia and Zimbabwe
were shipping through
Walvis Bay, Maputo and
Beira before, but are now
coming back to Durban.
The reason is probably
because these other ports
charge in the US dollar –
which is strong. So they’re
turning to Durban, which
charges in rands.”
Webb also highlighted
the growing age of SA’s
road transport f leets as
a contrary factor. Road
equipment has a certain
lifespan, he pointed out,
and eventually it gets to the
stage where maintenance
and repair is not feasible
any longer. “So you get hit
with a double whammy.
You either find the capex to
replace your fleet, or go out
of business."
Bleak outlook will force more mergers and buy-outs
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