CTRACK LOGISTICS BAROMETER

Gives Me Full VisibilityInsuranceSecures My Mobile AssetsSecures My Mobile Assets

Logistics Industry in South Africa **

According to Stellenbosch University and the World Bank, the cost of South African logistics is estimated to be 11,8% of Gross Domestic Product. Total turnover for the logistics industry for enterprises only involved in mining, retail and manufacturing, was estimated to be R274 billion in 2018.

However, warehousing, road freight and even pipeline volumes, are often not categorised as logistics.

For example, when major retailers like Shoprite or Pick ‘n Pay transport and store goods, the transported volumes are listed under the retail category. Retailers like these see transportation as a cost centre and any savings they make would be categorised as retail savings. Similarly, when a steel manufacturer delivers steel, the value add of the transportation is measured under manufacturing.

Transport as a cost centre is therefore difficult to accurately measure and is significant in the road freight and storage sub-sectors.

This means the country’s entire logistics sector is far more extensive than the estimated R274 billion, and is probably far closer to R480 billion. Furthermore, some services such as docking fees or air traffic control, are part and parcel of transportation generally but are not measured in a logistics or supply chain index.

There is also overlap between sea freight and cargo handling and the same is true of air cargo. Sometimes cargo spends time at the country’s ports and is charged storage or handling fees.

Supply chains are integrated, too, and enterprises can be registered differently in terms of their primary business. For example, we include Transnet terminals as part of the sea freight sector, but one could argue that it is also part of the cargo handling and storage sub-sectors

Below: Estimated turnover in 2018 for the SA logistics industry by sub-sector.

Industry sub-sector Turnover
(R billion annually)
Rail freight 61 870
Road freight 131 029
Air freight 14 053
Storage / Handling 38 316
Pipeline transport 6 024
Transnet / wate 22 747
Total 274 037

The Ctrack Logistics Barometer includes data from the road, rail, sea, air, pipelines and storage sub-sectors.

Using only the weights for actual transporters and cargo handlers for contract, we have established weights in order to make the most meaningful logistics measure possible. We have used 2016 as a base year and tried, where possible, to include small and micro operators.

** Research data supplied by Economists SA. **

2nd Quarter Land Transport Volumes Encouraging **

The Ctrack Logistics Barometer, which includes data from the road, rail, sea, aviation and pipeline sectors, shows that South Africa’s total logistics volumes rose 3.1% in July 2019 compared to the same month last year (see Figure 1).

The barometer also indicates that total logistics volumes in the 2nd quarter of 2019 improved 2,7% compared to the 1st quarter of 2019, the strongest level of growth recorded since November 2018 (see Figure 2)

The bounce back in the 2nd quarter of 2019 is attributed to more stable electricity supply from Eskom. July is the start of the 3rd quarter and if the trend holds up then we are confident that the economy will record further growth during the quarter.

The positive results were largely driven by the country’s land transport sector, which is up 4,6% on last year.

The number of heavy trucks that passed through the Tugela toll gate increased 3,6% in July compared to the same month a year ago. Heavy truck volumes on the N4 and N1 freeways recorded 6% comparative growth during the month.

Rail freight volumes, which were primarily comprised of bulk commodities, recorded 3,9% growth in July. The country’s pipeline volumes grew 2,8% for the quarter to July 2019, compared to the same period in 2018.

Sea freight saw a decline of -1,1% in volumes for the three months to July 2019 compared to a year ago, while air freight slipped -0.6% over the same period.

In Ctrack’s view, both transport modes are feeling the impact of a slowing world economy. Incidentally, exported container traffic is down -11,8% in the last three months versus the same period a year ago.

In terms of storage and warehousing, Ctrack notes that inventories have not recovered yet. This may be the reason behind increased imports, as local enterprises let stocks run down in the 1st quarter due to electricity constraints and negative economic growth. This has likely also resulted in a cautious approach to inventory and stock management.

Furthermore, the increase in imports is likely due to Rand weakness, with importers fearful that the rand may decline further. The overall picture is that the logistics industry in South Africa is in recovery mode, while stock management and Rand weakness continue to influence decision making.

Unlike container exports, bulk exports have increased +1,7%, probably due to the fact that commodities are less affected by the ongoing US-Sino trade war. It is important to note, however, that bulk export volumes record significant fluctuations nearly every month. Derailments and/or port delays can impact the entire supply chain, too.

Rail and road freight have remained strong over the short term, while storage volumes have also picked up (see Table 1).

** Research data supplied by Economists SA. **

Last Month vs year ago Last quarter vs a year ago Change from last month Change from last quarter
Rail 8.0% 3.9% 0.5% 2.4%
Road 3.7% 4.6% 1.5% 0.5%
Pipeline 0.8% 2.8% -3.1% 3.6%
Sea -6.1% -1.1% -4.1% 0.1%
Air -3.8% -0.6% -4.8% 1.7%
Storage 1.9% -2.6% 4.4% -3.9%
Logistics 3.1% 2.7% 0.8% 0.4%

Table Source: economists.co.za and Ctrack

Methodology used **

  • Each logistics sub-sector (rail, road, sea, air, pipelines and storage/warehousing) is given a weight. These are 2016 weights which are adjusted for growth and for “cost centre transport”.
  • Sub-sector measurements are recorded and indexed, with 2016 being equal to 100.
  • Each sub-sector is then seasonally adjusted. The seasonally adjusted measures are again indexed to 100.
  • We then add them up according to the relative weights as described above which forms a logistics index.
  • Changes to the logistics index are referred to as the Ctrack Logistics Barometer.
  • Each of the six sub-sectors is measured from different sources.
  • All measures are recorded in volume terms (or in constant price terms).

Notes for editors **

  • The Ctrack Logistics Barometer indicates freight volumes from the previous three months of 2019 against the same three months from 2018, as some monthly measures are highly volatile and can depend on single factors.
  • We do not have data for all national roads in South Africa at this stage.
  • Well over 10 000 heavy trucks a day travel on the country’s national and provincial roads.
  • Land transport figures include coal transportation to power stations, although most quoted land transport volumes relate to general consumer and intermediate goods transportation.
  • In terms of air freight, we do not have the direction of travel available, only the total volumes. Some trade analysts have stated that the trade upheaval will impact air freight products first as they are more likely to be “just-in-time” type goods.
  • All data is updated as it is made available.
  • We expect to have some Lanseria airport data in the next six to eight months.
  • We hope to receive urban traffic data from ETC and Sanral soon.

Data Sources **

  • Road freight: Statistics SA Land Transport Survey, N3 toll concession, Bakwena, TracN4, Sanral.
  • Rail freight: StatsSA. Richards Bay terminal for estimates.
  • Sea freight: Transnet National Port Authority
  • Air freight: ACSA, IATA
  • Pipeline data: SARS fuel tax collections
  • Storage and warehousing: StatsSA Quarterly Financial Statistics, Transhipment data from Transnet National Ports Authority.
  • Supplemented by economists.co.za for rail and air freight estimates. Last month based on data obtained from the above sources.

**Research data supplied by Economists SA. **