Logistics industry takes a battering

Although it’s almost two years since the global financial and trade crisis of 2008/09, the logistics industry is still getting a worse financial battering than it did in the crisis and immediately post-crisis periods, according to Luke Doig, senior economist at Credit Guarantee Insurance Corporation (CGIC). Liquidations figures compiled by Stats SA show that the logistics sector (transport, storage and communication) has had a higher growth in financial failures this year than in both 2009 and 2010. Also, in July, the industry performed much worse than either the manufacturing or construction sectors. Sectorally, manufacturing had 13 failures in July compared to 17 a year ago; construction 12 versus 14 in July 2010; but the logistics sector 11 compared to five twelve months earlier. “This, in our mind, still reflects the difficult trading conditions prevailing in the logistics sector,” said Doig. In the 2008-2011 period, the comparison of the logistics sector’s annual liquidations growth figures makes 2011 grim reading. At the height of the financial crisis, when total liquidations jumped 25.2% from 2008 to 2009, the logistics sector only saw closures rise from 126 to 137 (8.7%) – and they only climbed 18.2% to 162 last year. But this year’s figures show that a large number of members of the industry must have been struggling to stay alive in those two years. The 2011 year-todate (YTD) total of 132 versus the 78 (a significant increase of 69.2%) seen in the first seven months of 2010, indicates an extremely harsh climate for the broad transport sector. “I’m hazarding a guess that most input costs have risen fairly substantially,” Doig told FTW. “And, given the ultra-competitiveness of the sector, this makes it difficult to pass on price increases – so margins have come under increasing pressure.”