In 2012, the absolute cost of logistics in South Africa was R393-billion. Logistics costs for 2013 were estimated at R423-billion, with this number forecast to grow to between R456-billion and R470-billion in 2014, depending on fuel inflation.

The tenth State of Logistics (SOL) survey for South Africa, released on Tuesday, also indicated that logistics costs, as a percentage of gross domestic product (GDP), were expected to increase to 12.8% this year, up from 12.5% in 2013.

In 2003, logistics costs as a percentage of GDP were 14.1%, and total logistics costs estimates at R180-billion.

The SOL survey is published by the Council for Scientific and Industrial Research (CSIR), in collaboration with Imperial Logistics and Stellenbosch University.

Speaking at a panel discussion on the survey in Johannesburg on Tuesday, Stellenbosch University Centre for Supply Chain Management director Professor Jan Havenga said South Africa started off, “20 years ago”, with logistics costs as a percentage of GDP at about 18% – “we guess” – which meant 12.8% was a significant improvement.

However, in the US, logistics costs as percentage of GDP had declined from 16% to 8% currently.

“Our figure is still too high, and it has been going up over the last three, four years,” said Havenga.

He added that the current sources of increasing logistics costs were not necessarily inefficiency within the system, but rather “costs charged to the system”.

Fuel costs were of particular concern, he noted.

“It is external to us. We don’t know what will happen with the fuel price.”

In 2009, South Africa’s transport sector spent R40-billion on fuel. This was expected to increase to R110-billion in 2014.

Fuel costs had recently increased sharply as the rand weakened against most major currencies.

Havenga said recently introduced e-tolls on Gauteng’s highways served to improve truck movement and, therefore, logistics efficiencies, rather than increasing costs.

Aside from fuel costs, drivers’ wages, increasing from around R22-billion in 2009 to an anticipated R40-billion in 2014, should also be monitored, as well as the effect of possible interest rate hikes.

SOL survey scientific editor, the CSIR’s Nadia Viljoen, said that seeking improved efficiencies would not necessarily counter the problem of rising costs within South Africa’s logistics system.

“We can’t necessarily do what we do better. We need to do something different.”

Havenga noted that while trucks could be more fuel efficient, and truck drivers trained to reduce fuel use, one of the biggest opportunities to improve the logistics system laid in moving more goods onto South Africa’s rail system.

He said Transnet’s investment in freight rail capacity had seen rail tonnage increase over the last two years.

According to the SOL survey 2014, rail carried 195-million tons of goods (11.4%) in South Africa’s logistics system in 2011, and road 1.51-billion tons (88.6%).

In 2013, rail carried 210-million tons (12.1%), and road 1.53-billion tons (87.9%).

The 2014 SOL survey noted that a stronger modal shift to rail, as well as successful public-private partnerships, would both aid South Africa’s logistics system. Also, end-to-end integration of supply chain functions was the next major shift required to make business more customer-centric and competitive.

Viljoen emphasised that while South African companies were typically “great at what they do”, such as warehousing or transport, increased integration and efficiency across the supply chain could drive down costs in the logistics system.

Imperial Logistics chief integration officer Cobus Rossouw added that South Africa’s logistics system had to develop into one that was demand driven.

Instead of owning a truck and making it available when it suited the owner, the owner had to be able to respond to customers’ transport demands.

The world had changed in the last few years, said Rossouw. Consumers were “more and more demanding”, and there was pressure to deliver smaller loads “to more and more locations”.

He said South Africa faced steep seasonal peaks in the demand for goods, such as over Christmas and during hot summers, while Gauteng’s location also produced some challenges. The country’s economic heartland was in the centre in the country, 600 to 1000 km away from the nearest ports.