Photo by: Duane Daws
South Africa’s total logistics bill for 2012 is estimated to have risen to 12.8% of total gross domestic product, from 12.6% the previous year, as the contribution of transport to overall logistics costs hit 61% – its highest in nine years, and far higher than the global average.
This was revealed on Tuesday at the release of the ninth State of Logistics survey for South Africa, ‘Connecting Neighbours – Engaging the World’, published by the Council for Scientific and Industrial Research (CSIR), Imperial Logistics and Stellenbosch University.
The report, covering 2012, identified South Africa’s vulnerability to crude oil price volatility, which was exacerbated by the country’s entrenched dependence on road transport, as the primary driver of the higher transport costs.
In addition, respondents also flagged poor road conditions, a lack of law enforcement and prevalent noncompliance as the key challenges of the road freight sector.
Freight transported on roads grew by 1.3% to 1.55-billion tons in 2012, up from 1.53-billion tons in 2011. Rail transported 203-million tons in 2012, 4.1% more than the 195-million tons recorded the previous year.
CSIR researcher and scientific editor of the report Nadia Viljoen said that the survey delivered a call to action to address critical issues relating to the road freight sector, and underlined the need to diversify local freight transport.
“We must begin to shift from road to rail while addressing rampant skills shortages and misalignment in the logistics sector. Moreover, the Southern Africa Development Community (SADC) needs government and the private sector to join hands for ambitious land corridor initiatives and the development of a world-class maritime transshipment community for trade,” she commented.
Currently ranked thirty-ninth out of 157 coastal countries in terms of maritime importance, Viljoen said that South Africa, and the region, could become a world-class transhipment community owing to its geographic location.
The report outlined that the region offered substantial business opportunities in the context of natural resources, low-cost labour and a rapidly growing consumer market.
Competitive differentiators that could enhance the SADC’s standing in the maritime community were lowering port tariffs – particularly for transshipment cargoes – enhancing the availability of ship services at ports and increasing the reliability of port operations and scheduling.
“Respondents identified the unavailability of reliable service providers and partners, a lack of adequate infrastructure, long transit times and unreliability as the top three [logistics] constraints to doing business in Africa,” said Viljoen.
For proposed regional transport corridor initiatives to be successful, Viljoen believed that governments needed to create an environment conducive to lucrative private-public partnerships, with the necessary collaborative platforms in place to fast-track open discussion and negotiation.
Central to the success of regional collaboration, she added, was the development and improvement of local transport infrastructure.
“However, private sector involvement in South Africa’s National Development Plan is nonnegotiable for the success of transport infrastructure projects – both from a funding and planning point of view,” Viljoen cautioned.
The report further identified the unavailability of a skilled workforce as one of the key constraints to the expansion of business operations in South Africa, making it critical that the required logistics skills in South Africa are identified.
“Although operational positions are relatively easy to fill, an average of 65% of South African employees in the logistics sector have indicated that it will be difficult to fill tactical-level positions, while strategic-level positions are becoming more challenging to fill, with 66% indicating difficulties in 2012,” said Viljoen.