South Africa’s Logistics Barometer

Jan Havenga

Department of Logistics

Stellenbosch University

Logistics costs as a % of GDP – a 12 year time series

South Africa’s freight demand

What does it say about how we manage freight

transport?

I’ve not seen a single transport indicator, where South

Africa is lower than world average

South Africa’s logistics costs in perspective

Logistics cost components tracked over time

South Africa’s freight profile….

Current freight Future freight

Demand side

• Reshoring (trade reduction)

• Lower choice

• Consumption at source

• Recycling at source

• 3D printing

• Less Waste

Supply side

• More efficient trucking

• Drivetrain

• Fuel

• Driving habits

• More efficient logistics

• Scheduling

• Visibility and collaboration

• Lower empty haul

• Modal shift

Solutions

Tonne-kilometres by mode and typology

Rail friendly freight – The case for corridors

• Natal economic

corridor

• Natal rail friendly corridor

We estimate that between 40 and 60% of corridor

freight is rail friendly

• Cape economic

corridor

• Cape rail friendly corridor

What the Barometer has achieved:

• Positioning (modes/network design)

• Ongoing discussion around improvements

• Policy effects

• Shareholder involvement

• Industry involvement

• Demand management

• Forecasting

• Capital planningIndustry discussion

• Service design

Consistent reference and benchmark source

The demise and renaissance of rail

• Demise: 1985 to 2005

• Loss of density

• Lack of investment

• Inadequate regulatory

landscape

• Poor market space

identification

• Management issues

11

But what about ports?

• Rail renaissance: 2006 →

• Core business focus

• Demand management

• Market space identification

• Investment

Collaboration – 5 spheres

• Freight owners

• Logistics service providers

• Infrastructure owners

• State owned operators

• Regulator

12

Maritime Cost ComponentsSurface Cost

Components

Port Ocean

Delays increase:

1) Transport cost

2) Cycle stock cost

3) Safety stock cost

4) Administration cost

Delays increase:

1) Transport cost

2) Cycle stock cost

3) Safety stock cost

4) Administration cost

Extending the barometer to a full blown trade view

Demand forecasting - A thought on container forecasts

• Global state-of-practice uses a GDP multiplier for forecasts, this has

been proven to be a misleading approach

-

500

1 000

1 500

2 000

2 500

3 000

Ind

ex 1

979=

100

World GDP

World TEU

Containerisation propensity causes the “multiplier” to

disappear

0%

10%

20%

30%

40%

50%

60%

70%

% c

on

tain

eri

se

d

Year

Global trend for all freight

Container Penetration Factor (the Ceiling is 100%)

0%

20%

40%

60%

80%

100%

120%

Ferr

och

rom

e

Iron &

ste

el bas

ic indust

ries

Ferr

om

anga

nese

Wood &

wood p

roduct

s

Indust

rial

chem

ical

s

Food &

food p

roce

ssin

g

Oth

er

chem

ical

s

Citru

s

Mac

hin

ery

& e

quip

ment

Vege

table

s

Tra

nsp

ort

equip

ment

Pap

er

& p

aper

pro

duct

s

Deci

duous

fruit

Oth

er

man

ufa

cturi

ng

indust

ries

Non-m

eta

llic

min

era

l pro

duct

s

Moto

r ve

hic

le p

arts

& a

ccess

ori

es

Rubber

pro

duct

s

Meta

l pro

duct

s excl

. m

achin

ery

Ele

ctri

cal m

achin

ery

Bri

cks

Furn

iture

Textile

s &

clo

thin

g

Tobac

co p

roduct

s

Phar

mac

eutica

ls &

toile

trie

s

Cott

on

Pri

nting

& p

ublis

hin

g

Dai

ry

Liv

est

ock

(sl

augh

tere

d)

Subtr

opic

al fru

it

Vitic

ulture

2009 2040LK31

These commodities are 100%

containerised – No more so

called multiplier

Historic container

growth rate faster than

GDP

Future container growth

rate faster than GDP

Base

Extrapolated container forecasts versus

commodity-based forecast – what the error causes

0

2000

4000

6000

8000

10000

12000

1979

1984

1989

1994

1999

2004

2009

2014

2019

2024

2029

2034

2039

Index 1

979=

100

TEU History Extrapolated (10 yrs history)

Extrapolated (20 yrs history) Extrapolated (30 yrs history)

GDP Index Commodity-based forecast

100% containerised growth shows container limits

0

2000

4000

6000

8000

10000

12000

1979

1984

1989

1994

1999

2004

2009

2014

2019

2024

2029

2034

2039

Index 1

979=

100

TEU History Extrapolated (10 yrs history)

Extrapolated (20 yrs history) Extrapolated (30 yrs history)

GDP Index Commodity-based forecast

100% containerised

A final thought on demand side – the future of trade 19

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

80

90

10018

20

18

24

18

28

18

32

18

36

18

40

18

44

18

48

18

52

18

56

18

60

18

64

18

68

18

72

18

76

18

80

18

84

18

88

18

92

18

96

19

00

19

04

19

08

19

12

19

16

19

20

19

24

19

28

19

32

19

36

19

40

19

44

19

48

19

52

19

56

19

60

19

64

19

68

19

72

19

76

19

80

19

84

19

88

19

92

19

96

20

00

20

04

20

08

20

12

20

16

Tra

de

as

% o

f w

orl

d G

DP

GD

P (

tril

lio

n $

) c

urr

en

t p

ric

es

GDP (trillion $) current prices Trade as a percentage of GDPI w

as b

orn

Univ

ers

ity

Fir

st jo

b

Relocalisation is real – the speed and disaggregation is still

unsure

The short view confirms reversal

50%

100%

150%

200%

250%

300%

350%

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Ind

ex =

1990

Trade as a percentage of GDP GDP (trillion $) current prices Global container trade volume as percentage of global volume

Thank you!

www.sun.ac.za/logisticsbarometer