Poor rural roads push up agricultural logistics costs

The transport infrastructure
in rural SA is so poor that the
price of commodities moved
in and out of these areas is
hammered by road haulage
costs and no rail alternatives.
Information from the recent
SA Transport Conference
indicated that this logistics
cost was about 40%-60%
– pushing up the transport
price for agricultural products
distributed around the country
or to export gateways well
above the average rate,
measured at 16% of the gross
domestic product (GDP).
Research by economist Jan
Havenga published in the SA
Journal of Economics showed
that SA’s logistics costs were
much higher than the global
average.
The majority of these costs
were attributable to road
transport, he said, of which the
biggest cost driver was fuel,
which in turn was determined
by volatile oil prices – which
have remained in the US$112-
120-per-barrel range despite it
being the lower demand period
of the northern hemisphere
summer.
“This poses a significant
exogenous risk to logistics cost
management in SA,” added
Havenga. “The risk can be
mitigated through a structural
adjustment in long-distance
freight transport from road
dominated to rail dominated.”
But, the transport
conference was told, the
railways infrastructure needs
to be vastly improved because
it is hindering the cost-efficient
movement of products –
particularly bulk products like
commodities.
High logistics costs are
continuing to hurt South
Africa’s competitiveness,
according to the State of
Logistics survey, conducted by
CSIR and Imperial Logistics.
It said that logistics costs
made SA products more
expensive in the global market
place, which, added Imperial’s
Abrie de Swardt, made the
country uncompetitive with
regard to exports.
But there may be a partial
answer to the excessive
road transport costs in rural
farming areas, which could
benefit agricultural products
by improving the dilapidated
condition of the road network.
Deputy transport minister,
Jeremy Cronin, said that
R6-billion had been ringfenced
to upgrade rural roads.