Survey reveals staggering rise in logistics costs

Logistics costs as a percentage of GDP have increased year on year and were hovering at around 12.8% in 2012, the 9th State of Logistics Survey revealed. The annual survey, conducted by the Council for Scientific Research (CSIR), the University of Stellenbosch (US) and Imperial Logistics, found that the contribution of transport costs to the overall logistics costs in 2012 was 61% – the highest it has ever been in the past nine years and far higher than the global average. In measuring logistics costs as a percentage of the transportable GDP the figures are even more staggering – 44% in 2011 and 46% in 2012 contributed to the upward trend of transport costs. According to Dr Jan Havenga of the University of Stellenbosch, logistics costs equalled R370bn in 2011 and were estimated to have reached R400bn in 2012. “Essentially it is getting worse. It is as simple as that,” he said at the launch of the survey. Havenga said the four main drivers of logistical costs were transport, warehousing, management and administration as well as inventory carrying costs. “But of all of these, transport costs have been identified as the major risk. The vulnerability of transport costs to a volatile cost driver – the price of crude oil – and South Africa’s entrenched dependence on road transport does not bode well for the economy,” said Havenga. The survey – that for the first time closed the two-year time lag between data collection and publication of previous years – also found that inland freight volumes had risen across the board in 2011 (+4.9% in tonnes, +10.1% in tonne km) and in 2012 (+1.8% in tonnes, +2.1% in tonne-km) with the most significant growth being on the KwaZulu- Natal-Gauteng and Western Cape- Gauteng corridors. According to Havenga, data obtained from a broad range of industry and government stakeholders identified the top three challenges in the South African road freight sector, as poor road conditions (64%), the cost of fuel (52%) and the lack of law enforcement and prevalent non-compliance (43%). Havenga said a welcome finding in this year’s study that was worth noting was the slight increase in overall rail market share from 11.1% in 2010 to 11.5% in 2012 in terms of tonnes and from 29.3% in 2010 to 29.9% in 2012 in terms of tonne km. “The recent upswing in the rail share has occurred more rapidly than was anticipated. The modal shift objectives of increasing bulk exports of coal and iron ore; recapturing both export and domestic bulk markets for other ores; and making first attempts to increase the high-value and corridor market shares are beginning to bear fruit,” said Havenga. At the same time the survey named the unavailability of a skilled workforce as one of the key constraints to the expansion of business operations in South Africa. “It has become critical to identify the logistics skills requirements in South Africa so that these acute shortages can be addressed to the benefit of trade in and with South Africa and SADC,” said Nadia Viljoen, scientific editor of the survey. INSERTS & CAPTIONS Logistics costs equalled R370 billion in 2011 and were estimated to have reached R400 billion in 2012. – Dr Jan Havenga It has become critical to identify the logistics skills requirements in South Africa so that these acute shortages can be addressed. – Nadia Viljoen