Logistics costs a roadblock to recovery

Things are starting to look
up for shipping and logistics
companies servicing the
South African auto market –
but logistics costs remain a
major roadblock.
“Exports have improved
despite the overseas market
– particularly Europe – still
recovering,” says Clint
Carmichael of NYK Line
in Durban.
But, adds Lawrie Bateman,
director of MSC Logistics,
“SA auto manufacturers
are under pressure from
worldwide manufacturers to
produce vehicles at a cost that
is competitive.”
“It's encouraging to see
new contracts being secured
for new models which will
assist with the overall export
volumes increasing for 2010. It
is also encouraging to see the
recent announcement through
Naamsa (National Association
of Automobile Manufacturers
of South Africa) that the
motor manufacturers will
double their investment to
R4.62 bn for 2010, he
told FTW.
“The first two months of
2010 have shown that new
vehicle sales are very positive
– actually February sales are
the highest since October
2008,” says Bateman.
Asked how the logistics
industry could help reduce
the logistics costs that make
South Africa less competitive
due to the distance to
market and major areas of
supply, Carmichael has two
suggestions. “First is the
actual port costs – the fact is
that the cost of port calls into
South Africa have increased
substantially, not only on
shipping lines’ port costs but
shipping and landing costs
which are paid by the motor
manufacturer.
“This prevents lines from
making additional port calls
which in turn places pressure
on the landside logistics.
“Which brings me to
the second point – inland
transportation costs on both
rail and road deliveries are
relatively expensive if you
measure it in the total logistics
chain. Both of these aspects
go hand in hand – if the port
call costs were reduced,
lines could look at multiple
ports which would take the
pressure off road/rail, creating
additional capacity that would
more than likely create further
competition resulting in
cheaper rail/road tariffs.
“Both of these factors have
contributed to shipping lines
and motor manufacturers
looking at alternative ‘cheaper’
options like Maputo.
“Whilst Maputo has created
an aspect of competition,
we believe more needs to
be done in terms of creating
competition within South
Africa's own port system,”
he said.
MSC has been looking for
solutions within the current
status quo: “We are way
ahead as we have strategic
depot facilities within a five
kilometre radius of two of the
major SA auto manufacturers,”
says Bateman.
NYK also adapts to the
needs: “During the course of
last year several NYK services
reduced their call frequency to
South Africa. However with
positive signs in this sector
we have increased frequency
which will already be effective
from March 2010.