CTRACK TRANSPORT
AND FREIGHT INDEX

 

CTRACK TRANSPORT AND FREIGHT INDEX

Transport and Freight 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-sectorTurnover
(R billion annually)
Rail freight61 870
Road freight131 029
Air freight14 053
Storage / Handling38 316
Pipeline transport6 024
Transnet / wate22 747
Total274 037

**Data dated July 2019**

The Ctrack Transport and Freight Index 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. **

October 2019 Transport and Freight Index Report

Next edition will be available by November 30, 2019**

The Ctrack Transport and Freight Index (Ctrack TFI), previously known as the Ctrack Logistics Barometer, indicates a slower growth trend in transport volumes during September 2019.

It also reveals that the slowing world economy is impacting both South Africa’s international transport volumes, as well as local rail and pipeline volumes.

That being said, road freight volumes grew 2,5% while rail freight volumes edged up 0,2% between July and September 2019 compared to the same three-month period in 2018.

Considering both a slower domestic economy and a far weaker international trade environment, land freight is still in a relatively stable position.

But, the unpredictable trade war between the US and China that last year provided a welcome boost to American trade to China has this year had the reverse effect, while EU economies continue to slow.

Dutch Economic Bureau, CPB, indicates that world trade volumes declined -1,5% between July and September 2019 compared to the same period a year ago. On this basis, the decline in world trade is the steepest since November 2009.

In terms of South Africa’s logistics volumes, the CTFI shows a decline of -0,7% for the period July to September 2019 compared to the same period a year ago.

The Ctrack TFI also reflects a far weaker South African economy than was the case between April and June, when all indications were that growth was back in full swing.

This downturn, while not unexpected, is not good news for the South African economy and its ability to create work and income for its citizens. Weak business confidence levels need to be addressed as soon as possible, since capital investment only takes place when businesses are confident and certain about the future.

Transport operators will have to monitor their costs and performance closely. Risks must be contained as much as possible, too, while opportunities remain hard to come by.

Road freight is a highly competitive business, and transport prices have barely increased in the last year. But, some market share gains have been realised through price increases in both the rail and pipeline sectors.

Fuel products that are usually piped inland and then distributed for Gauteng users and to other provinces, are now being transported by road to places like Harrismith and Mbombela.

Furthermore, coal is being transported to local power stations by road instead of rail and conveyor belts. Other products that used to travel by rail are sometimes now also being loaded onto trucks.

Sea freight and air freight volumes continue to feel the effects of the US-Sino trade war and Brexit, and may do so for many months to come. Container shipping prices are lower in many markets, while about 3,5% of container capacity is not being used, up from 2% or so a year ago, according to Drewry shipping consultants.

Air traffic volumes between Africa and the rest of the world is growing at about 8%, albeit from a very low base. South Africa’s domestic air freight volumes, however, are in decline and not growing other than to certain African and Middle Eastern destinations. Both air and sea freight volumes have been relatively weak performers for the best part of two years now.

We have updated the storage and warehousing data to include separate indices for international trade and manufacturing, as well as domestic trade (retail as well as wholesale).

One cannot fail to notice that inventory levels are being lowered. Many retailers are storing fewer goods to save on both stock costs and floor space.

In manufacturing, the same savings are taking place as factory owners are being squeezed by slow domestic demand and export volume uncertainty. The decline of nearly 10% between July and September compared to the same three months a year ago is worrisome.

In short, the Ctrack Transport and Freight Index for October shows that in an uncertain world, the transport sector can’t escape feeling the pinch.

August 2019 Logistics Barometer Report

Next edition will be available by October 31, 2019**

Ctrack Logistics Barometer indicates road freight resilience **

August data from the Ctrack Logistics Barometer indicates pronounced deceleration in global logistics growth (see figure 1), particularly in sea and air freight volumes (see figure 2). While the growth slowdown was already evident in July’s Ctrack Logistics Barometer, the pace of the slowdown is now more apparent, as can be seen in the barometer’s short-term data.
fig-1
fig-2
** Research data supplied by Economists SA. **

Despite this, total freight volumes in South Africa are up 1.1% on a year ago on a three-month (June, July, August) moving average basis. Road freight volumes showed the strongest positive trend rising 3.1%, while sea freight volumes showed the biggest decline of -3.5%.

The global trade war is starting to have an impact on South African trade and the volume of shipped containers is a clear indication of a slowing world economy.

Break bulk volumes at South African ports have declined 35.3% from a year ago on a three-month (June, July, August) moving average basis – the biggest year-on-year decline recorded since 2008. SA container volumes declined 6.2% during the same period.

Land transport though is still growing due to internal demand, while bulk coal and iron ore exports show positive growth. However, even here the short-term trend is slower than before, with the Ctrack Logistics Barometer suggesting far more mundane economic performance in the 3rd quarter of 2019.

The pipeline sector, which is dominated by fuel transportation, indicates a small decline of -0.4% on a year ago but a much larger -5.1% decline compared to July. The price of fuel has not increased much but users have either delayed buying more in the hope of lower prices, or due to uncertainty in the short-term economic outlook.

With a sudden rise in the oil price, higher fuel prices are likely in October. If fuel volumes still decline in September, the reason will likely be attributed to the uncertain economic outlook.

parallax background

The measurements below (Table 1) show freight volume changes – in percentages – over different time periods. The most important of these is the three-month moving average (June, July, August) measured against the same three months of last year.

 Aug 2019 vs Aug 2018March to May 2018 vs 2019Change from July 2019 to August 2019Change from March to May 2018 vs 2019
Rail0.1%1.0%1.1%-1.0%
Road2.2%3.1%0.8%-0.5%
Pipeline-5.9%-0.4%-5.1%-0.4%
Sea-1.5%-3.5%-4.1%-8.5%
Air-2.0%-0.4%0.9%-0.8%
Storage-6.1%-2.1%-6.3%0.9%
Logistics-0.1%1.1%0.7%-1.1%

The drop in sea freight volumes is confirmed by the CPB World Trade Monitor. Overall, global trade is estimated to have declined by -0,4% for the three-months to June 2019 compared to the same period a year ago.

Although this data is a little earlier than the August Ctrack Logistics Barometer data, one can surmise that declining world trade will weigh on the barometer since logistics by its very nature is a cross-border industry heavily influenced by global trends.

Strangely, in contrast to slowing world trade trends, the latest IATA data shows a substantial increase in international air freight for South Africa.

Nonetheless, the global trade war is impacting world trade and that will likely have a negative impact on both sea and air freight for the next few months or even quarters. Slower growth will also influence the movement of minerals – the main income generator for Transnet Freight Rail.

Furthermore, the drought in the wheat growing regions of the southern Cape will impact road freight. More wheat may have to be imported, making for longer journeys for transporters. This may already be a reason for the positive growth seen in road freight.

“We are proud to say the Ctrack Logistics Barometer, now in it’s second month, has been well-received in the marketplace,” says Hein Jordt, managing director of Ctrack SA.

“It appears that road transport continues to gain market share, providing the backbone in the South African logistics industry. However, it remains imperative for transport and logistics companies to manage their delivery fleets closely in lieu of recent oil price increases. Only a holistic fleet management system with daily insights – such as Ctrack’s business intelligence reports and bureau services – can simplify this important task for fleets.”

July 2019 Logistics Barometer Report


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. **

parallax background
 Last Month vs year agoLast quarter vs a year ago
Rail8.0%3.9%
Road3.7%4.6%
Pipeline0.8%2.8%
Sea-6.1%-1.1%
Air-3.8%-0.6%
Storage1.9%-2.6%
Logistics3.1%2.7%

 

 Change from last monthChange from last quarter
Rail0.5%2.4%
Road1.5%0.5%
Pipeline-3.1%3.6%
Sea-4.1%0.1%
Air-4.8%1.7%
Storage4.4%-3.9%
Logistics0.8%0.4%
parallax background
 Last Month vs year agoLast quarter vs a year agoChange from last monthChange from last quarter
Rail8.0%3.9%0.5%2.4%
Road3.7%4.6%1.5%0.5%
Pipeline0.8%2.8%-3.1%3.6%
Sea-6.1%-1.1%-4.1%0.1%
Air-3.8%-0.6%-4.8%1.7%
Storage1.9%-2.6%4.4%-3.9%
Logistics3.1%2.7%0.8%0.4%

**Research data supplied by Economists SA. **