Transport's contribution to logistics costs reaches 9-year high

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OilBarrels.jpgThe vulnerability of South Africa’s 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, according to the 9th State of Logistics survey for South Africa 2012.

 

The contribution of transport costs to overall logistics costs in 2012 is pinned at 61%, the highest it has been in the past nine years and far higher than the global average, said Nadia Viljoen, scientific editor of the survey, at the survey launch in June.


Logistics costs as a percentage of total GDP are estimated at 12.8% in 2012 and 12.6% in 2011.

A milestone for the State of Logistics survey, researchers from Stellenbosch University have been able to close the time-lag between data collection and publication to ensure the 2013 edition reports on the 2011 and 2012 logistics costs and freight flows.
 

The survey is published in partnership by CSIR, IMPERIAL Logistics and Stellenbosch University.
 

“The survey delivers a message of action,” Viljoen emphasises. “South Africa must address critical issues relating to the road freight sector, shift freight from road to rail and address rampant skills shortages and misalignment in the logistics sector.”
 

Cost drivers
 

For the survey, data obtained from a broad range of industry and government stakeholders identified the key challenges in the South African road freight sector.
 

Respondents felt that poor road conditions (64%), the cost of fuel (52%) and a lack of law enforcement and prevalent non-compliance (43%) are the top three challenges in the industry. The condition of the country’s roads is also regarded as a critical cost driver by 73% of the respondents.
 

Government’s National Development Plan clearly states the tremendous challenge the country faces by effectively missing a generation of capital investment in infrastructure. South Africa is not unique; around the world, inadequate or poorly maintained infrastructure presents major economic challenges.
 

The survey furthermore reports that the contribution of poor road conditions to fatal accidents shows that the effect of bad roads stretches much further than increased vehicle operating costs. Road-related factors contribute to 5–15% of fatal road accidents, of which 28% can be attributed to poor road surface conditions. The total cost of fatal accidents caused by poor road conditions in 2010/2011 is estimated at between R207-million and R621-million.
 

Regional connectivity
 

SADC could become a world-class transhipment community due to its geographic location - South Africa and Mauritius currently rank 39th and 50th, respectively, out of 157 coastal countries in terms of maritime importance.
 

However, the top three constraints to doing business in Africa are unavailability of reliable service providers and partners; lack of adequate infrastructure; and long transit times and unreliability.
 

Skills
 

The unavailability of a skilled workforce is viewed as one of the key constraints to the expansion of business operations in South Africa.
 

This appears to be a global problem with 39% of businesses around the world struggling to recruit the appropriate people. Nearly two in five businesses (37%) in the BRIC (Brazil, Russia, India and China) economies believe an inability to get the right workers will dampen growth in 2013.
 

It has thus 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.
 

“We believe the 9th State of Logistics™ survey opens the floor for vigorous discussion between all parties involved to ensure that South Africa curbs its logistics costs as far as possible, while making the best use of opportunities presented, and, in fact, creating its own opportunities,” concludes Viljoen.
 

Click here to view: 9th State of Logistics Survey

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