Logistics statistics reveal financial and operational risks

Annual manufacturing freight flow map (University of Stellenbosch).
Annual manufacturing freight flow map (University of Stellenbosch).

Logistics statistics, including transport, warehousing, inventory, and management, reveal a great cost, security and safety risk in African business.

The Logistics Barometer South Africa 2016 reports logistics costs estimates for 2015, and forecasts for 2016. At R429-b, South Africa’s logistics costs equal 11.2% of GDP.

South Africa’s economy is transport intensive. Logistics costs include:

  • Transport 57%
  • Inventory carrying 15.2%
  • Warehousing 14.6%
  • Management and administration 13.5%.

About 83% of transport costs are in road, with rail contributing tariffs 15%, and pipeline tariffs 2%. The biggest contributor to road transport costs remains fuel.

Logistics cost are forecast to increase to almost R500-b in 2016, to 11.8% of South Africa’s GDP.

South African logistics cost as a percentage of GDP, is rising again, after a period of decline. Some forms of transport are not economical, and also raise occupational and public safety risks.
South African logistics cost as a percentage of GDP, is rising again, after a period of decline. Some forms of transport are not economical, and also raise occupational and public safety risks.

Stellenbosch University’s Department of Logistics released the Logistics Barometer 2016 in October. It continues the research published in the CSIR State of Logistics survey for South Africa, which was discontinued two years ago. Stellenbosch University took over the task last year.

“We are further contributing to the extensive knowledge base that has been created over the past 13 years,” said Prof Jan Havenga, who pioneered logistics costs research at SU.

Zane Simpson, a researcher in the department, said: “We are one of only three countries in the world that have national logistics costs measured annually.”

Annual data reveals trends that operators could apply in operational and strategic analysts, in the public and private sector, for infrastructure planning, policy development and investment objectives, said Prof Havenga.

The Logistics Barometer has more than 20 years of research into freight volumes and freight flows in South Africa. The calculations have been refined over the last 13 years to make it one of the most robust and reliable quantitative reports on logistics costs globally.

Fuel cost drains other resources. Variouis forms of taxation are also rising. The cost of incidents is not reflected in the current format of the logistics costs barometer. See other posts on the Responsible Care annual report, for health and safety incident statistics in the chemicals sector alone; however note that each sector has a different incident profile.
Fuel cost drains other resources. Various forms of taxation are also rising (fuel tax, COID, UIF, equipment import tax, VAT, tyre levy, toll fees, licences, and fines). The cost of incidents is not reflected in the current format of the logistics costs barometer. See other posts on the Responsible Care annual report, for health and safety incident statistics in the chemicals sector alone; however note that each sector has a different incident profile; and that incident costs are not predictable.

African logistics cost statistics to follow

“Many countries admire our cost model.  We have extended our work to other Sub-Saharan countries and most recently to India,” said Prof Havenga.

“After improving for many years, the relationship between national logistics costs and the GDP has been moving in the wrong direction for the past five years.”

The researchers have identified an urgent need for necessary and suitable skills, or soft infrastructure, to be developed.

“South African supply chain managers and executives have had the required experience and know-how, that enabled the industry to perform well in the global arena.

South African logistics costs are about average worldwide, but could be cheaper, as indicated by USA and Australian statistics.
South African logistics costs are about average worldwide, but could be cheaper, as indicated by USA and Australian statistics.

Transport skills pool is shrinking

“Knowledge and understanding of key operational elements; and the ability to adapt to an ever-changing environment; has been a key strength of successful logistics and supply chain companies in South Africa for decades,” the researchers said.

“However South African supply chain generation is at risk of losing this advantage, due to sub-standard basic education, under-performing higher education, and lack of practical knowledge and skills transfer in the work environment.”

South African mining freight flow, indicating massive tonnage from Sishen to Saldanha harbour, and from the platinum belt to Richards Bay harbour. These routes are mainly by rail.
South African mining freight flow, indicating massive tonnage from Sishen to Saldanha harbour, and from the platinum belt to Richards Bay harbour. These routes are mainly by rail.

“There are some commendable initiatives from major logistics service providers in South Africa relating to training and skills development. A renewed focus on these areas is necessary to support the sustainability of the industry, and to facilitate continued human resources growth, development and skills transfer.

“This will contribute to South Africa’s competitiveness and performance in the global supply chain, with the added benefit of economic growth and social development in the country.”

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Edmond Furter

Editor at Sheqafrica.com
Edmond Furter is the editor of Sheqafrica.com. He is a freelance technical journalist, and has won six journalism awards. He specialises in industrial, business, and cultural content in web, journal, and book formats.