Whopping increase in logistics costs widens competitive barrier

The costs of logistics increased by a whopping 6.9% totalling around R339 billion a year compared to the previous year’s R317 billion, the Sixth State of Logistics Survey found. Comparing this to the 2004 figure of R213 billion, domestic costs remain far too high, said Dr Jan Havenga, director at the Stellenbosch University Centre for Supply Chain Management. The State of Logistics survey, published annually by the Council for Scientific and Industrial Research (CSIR), Imperial Logistics and Stellenbosch University, found that while the increase in the costs for 2008, the time-frame for the study, was at its lowest since 2004 as a percentage of gross domestic product (GDP) at 14.7% of GDP, it was exceptionally high compared to other countries. The United States logistics costs are only 9.4% of GDP. “Global pressures remain to reduce logistics costs, while increasing emphasis is being placed on providing quality service and adding value. Furthermore, in line with global trends, the drive towards a more sustainable logistics system is gaining prominence,” said Hans Ittmann, CSIR built environment executive director. This year’s edition of the survey, themed ‘logistics values and costs – driving macro and micro-economic change towards global competitiveness and sustainability’, once again emphasised the critical economic value that should be derived from logistics. “The real mitigation of risk and realising sustainable logistics solutions can only, however, be generated through effective collaboration between private and public sectors, process improvements and structural changes,” said Ittmann. With transport continuing to be the biggest contributor to logistics, making up some 50% of the costs, it was important for the country to recognise the current situation could continue much longer. “The value that logistics adds to the South African economy, contributing to its global competitiveness and sustainability, should be greater than the costs,” said Ittmann.