CTRACK TRANSPORT
AND FREIGHT INDEX

 

CTRACK TRANSPORT AND FREIGHT INDEX

June 2020 Transport and Freight Index Report

Released: 25 June 2020

Logistics downside at its worst..with a small but

South Africa’s logistics industry experienced its worst monthly volumes since records began, according to the latest Ctrack Freight & Transport Index.

With a 20,9% decline compared to the same month a year ago, the volume of goods transported and stored in the country dropped by over one-fifth during the month.

However, the biggest volume drops shifted away from local land-based transport to international transport, and both SA’s rail freight and road freight volumes showed signs of recovery.

Ctrack Index And Co-incident indicator 2020

In fact, both road and rail freight as well as storage volumes increased compared to April’s levels. The recovery in these sectors was realised as the country shifted from level 5 to level 4 lockdown restriction.

The local transport sector has probably seen the worst, while international trade remains in the midst of the Coronavirus crisis.

The air freight sector needs to open up as soon as possible. It is clear that many air freight companies and freight forwarders in the sector will not survive, while important exports such as flowers, table grapes and even Harrismith’s apples continue at snail’s pace.

The air transport sector - both passenger and freight - may not return to pre-Covid-19 levels for three years.

IATA estimates the sector will make losses of $84,3 billion this year having already lost $419 billion in revenue. Between January and July, 7,5 million scheduled flights were cancelled worldwide. Non-scheduled air freight is down over 80% in some countries.

In a normal year, air freight transports over 52 million metric tons of cargo - about 35% of all global trade by value. In SA, some respite is expected by the end of July as international flights ramp up. But clearly, air freight is the hardest hit sector in transport.

Ctrack Freight Transport Sector 2020

The good news is that, apart from air freight, the worst is now behind us and the governments of the world are working quickly to reopen their borders. Air freight volumes should see major improvement by August.

Pipeline volumes in SA are likely to disappoint in the short term. While volumes were up last month, large scale thefts and damage to infrastructure have impacted the industry negatively.

Perhaps the biggest question for transport and logistics service providers is when will normal trading conditions return. We believe road and rail freight volumes will get close to normal in the next three months or so.

Sea freight volumes may take up to the end of the year to normalise.

Air freight however needs scheduled passenger flights to resume fully. That may take a few years as Covid-19 infection fears linger on.

“Normal” logistics volumes may mean 95% of the old normal for a while. Complete economic recovery needs time and we will have to be patient to regain the last 3% to 5%. The new normal should be good enough though for most transporters to compete and win back market share.

The old normal for local land transport volumes may only be realised by the end of next year though. But, like all recessions, the first part of the bounce back is expected to be quick. It is the last part that always takes the longest. That is the nature of the business cycle.

Storage of high-value goods, such as mobile phones and gold will increase fairly quickly. Moreover, some goods such as fresh fish, which is often flown up from the coast, is going to be moved via road. So, the road freight sector may benefit from the modal shift, along with parts of the storage sector in the interim.

While the May 2020 Ctrack Transport and Freight Index numbers are disappointing, we are seeing green shoots in the supply chain environment. Transporters need to get ready for a return to “normal” in much of the logistics industry from next month.

parallax background

Table 1: Subsector of Ctrack Transport and Freight Index

May 2020 Tables

% Change
Between
Quarter to May: 2020 vs 2019May 2020 vs April 2020Quarter to May 2020 vs. Quarter to Feb 2019
Rail-17,9%7,8%-14,9%
Road-19,9%22,5%-11,6%
Pipeline-1,1%-2,4%-0,4%
Sea-28,0%-21,2%-25,8%
Air-44,5%-27,7%-41,4%
Storage & Handling-19,3%18,6%-17,8%
Ctrack Transport
Freight Index
-20,9%12,6%-15,6%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

April 2020 tables

% Change
Between
Quarter to April: 2020 vs 2019April 2020 vs March 2020Quarter to April 2020 vs. Quarter to Jan 2020
Rail-12,1%-24,2%-6,7%
Road-16,5%-32,2%-9,4%
Pipeline0,2%2,0%0,0%
Sea-9,6%-29,5%-9,3%
Air-23,5%-46,2%-24,0%
Storage & Handling-13,4%-30,9%-8,6%
Ctrack Transport
Freight Index
-14,7%-30,2%-9,3%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

“While air freight volumes remain a major concern, we can see there is some light at the end of what has been a very dark tunnel,” comments Hein Jordt, managing director of Ctrack South Africa.

“People around the world have shown tremendous courage and resourcefulness during this unprecedented global pandemic. We are encouraged and remain hopeful that the logistics industry, like many others, will eventually return to some level of normalcy sooner rather than later,” he concludes.

May 2020 Transport and Freight Index Report

Released: 29 May 2020

COVID-19: A disaster like no other

Ctrack Freight and Transport index shows steepest decline yet! A world out of sync in a lockdown and goods stay at home too.

Very few industries will escape being impacted negatively by the COVID-19 virus crisis and subsequent lockdowns around the world. The result is that the world’s transport logistics and supply chain management are in a real mess. The world is witnessing the virtual total collapse of an industry sector that is vital to the global supply network. It is probably at its worst right now, (end May). The resulting mess will take months to clear.
The Ctrack Freight and Transport Index recorded a decrease of 14,7%. Perhaps it is better to describe this as a collapse and not just a decline.
Trucks wait for days to cross borders; ships wait weeks outside ports, and aircraft are grounded for months. Some countries are running out of storage capacity for petroleum products. Many importers are now being forced to store goods locally at huge cost as demand has dried up. Cargo transfers from one country to another have declined by almost 40%.

Governments are not co-ordinating much in terms of logistics and supply chains, while fearful and economically challenged consumers are leaving warehouses full and supply chains stranded. This is resulting in cargo being left stranded at sea, on trucks and trains as well as at factories and warehouses. Rail is still delivering to ports and mountains of bulk commodities, such as coal and iron ore, continue to grow and add to the chaos.
Merchant fleets often do not want to load cargo as they fear having to finance loaded ships for months with no payment in sight as companies continue to file for bankruptcy around the world.
Only a few aircraft have been permitted to operate, so produce such as fruit is rotting on farms around the world while many people are starving.

Just as people stayed at home so too did many goods. Goods stayed in the ground, in warehouses, on trucks and ships. Comparatively few products have reached the supply chains. The situation has caused such a cargo jam that it will take a long time to sort it out.
People working in the freight industry worldwide who are still keeping us fed and supplied with medicines, medical equipment and other essentials have not even been given a “shout out” to show the nation’s appreciation. The things that matter generally arrive on time and help the world try to beat the crisis. A big thank you to all of you in the transport industry from all of us at Ctrack and its partners!

The South African Lock jam

The dramatic decline of 14.7% in the Ctrack Freight and Transport Index for April is an important indicator of the very worrying situation that currently exists in the logistics and transport sectors of the South African economy. The fact that the data is smoothed out to better show trends does not fully reflect the logistics horror now apparent in South Africa. For that we will have to wait for data from May and possibly June.
The volume of goods shipped and landed in South African ports was less than at any time since the year 2000. We believe that we are probably back to levels last seen in this country before it became a democracy.
Aircraft movements came to a virtual standstill in April and were the lowest in living memory. There were only a little more than 2 000 fights into or out of South African airports, while the amount of goods transported is probably the lowest since World War II.
Road freight volumes, even when smoothed, were the lowest since 2008 while rail is at early 2008 levels and declining further.
We have reports of truck drivers going hungry at border posts and food and medicines stuck at borders between some African countries. Regulations have been changed so often that it is a fulltime job for industry bodies such as the Road Freight Association (RFA) to keep abreast of the many changes. Smaller operators in all transport and logistics sectors are struggling to keep up.

The strangest occurrence amidst all this chaos was that higher volumes of petroleum products than usual were pumped into Gauteng, probably due to storage requests rather than for actual use by motorists and transport companies. This was also the only subsector to record positive growth in April, even if it was only 0,2% above the figure from a year ago.

Chart 1: the Ctrack Freight and transport index over time.

“It is no good looking in the rear-view mirror,” commented Hein Jordt, Managing Director of Ctrack. “Now is the time to look ahead through the windscreen and develop manageable strategies and business plans to get your business back on its feet. We, at Ctrack, are very aware of the hardships that lie ahead and the fact that the business environment will be more competitive than ever as everybody does their best to recover from this devastating economic setback we are all suffering.

“Now is the time to think out of the box. Be innovative. We have to reset everything to deal with a new normal. We only have a limited timeframe to reach out to existing customers and assure them of our ongoing support so as to retain them.
“We have to develop methods of attracting new customers too. Remember, it is customers who will decide your future with their wallets and service level expectations. COVID-19 has changed the playing field and it is up to us to adapt or die!”

April 2020 Transport and Freight Index Report

Released: 29 April 2020

Coronavirus causes supply chain nightmares

Reduction in total freight volumes for the year to March 2020 of -7,1% indicates the depth of the decline in the local goods economy. Despite not having many lockdown restrictions, the first quarter drop in volumes was still the steepest experienced in South Africa since 2016.

The decline is consistent with a -3% to -4% slump in overall economic activity in the first quarter, thereby deepening the recession. We expect it to worsen before the economy starts to recover after the second quarter.

However, the -10,6% single month decline in March is the most significant monthly decline we have on record, which goes back to January 2008. The decrease in March volumes was even more severe than in March 2008 when the financial crisis crippled the world’s economies.

Ultimately, the Coronavirus has hurt the freight and transport sectors more broadly than that crisis did.

While many service areas of the economy like food, retail and teleconferencing were able to continue, the decline in production, combined with numerous supply chain disruptions, has compounded the industry’s woes.

With profit margins of less than 4% in road freight and about 6% in rail, it is clear that many companies will struggle to survive without government help. The 10% drop in road freight in March is of grave concern, as the sector is the backbone of the economic value chain.

Time constraints and other blockages are increasing transport costs as transporters have to pay staff for the long hours worked. While the cost of transport declined due to the oil price, employee costs rose nearly 8% in March.

On top of this, some trucks have been quarantined for weeks in neighbouring countries, while coordination between provincial traffic authorities in South Africa is incredibly slow.

Fuel sales, which may have spiked due to the decline in the fuel price in early March, are now under tremendous pressure.

The airline industry, from both the passenger and freight side, is unlikely to be the same again. Reports of voluntary salary cuts and the taking of early leave are numerous.

Further reports in the media suggest some sailors have not been able to get any shore leave - even in cases where cargo vessels are anchored outside the harbour. Oil tankers are primarily now used for storage of oil as the supply far exceeds demand.

Farming value chains are also struggling. Restaurant closures mean fewer sales, while too little fertilizer and other inputs are arriving.

Warehouses may not yet fully reflect the massive build-up of stock they are having to keep. The storage problem is being exacerbated by the urgent movement of freight away from congestion points in the country’s ports. Some ships are acting as storage facilities at sea.

The Ctrack Freight & Transport Index is likely to show further freight volume declines in the next two months. The Ctrack Index is the broadest and earliest available data point for the overall freight sector in South Africa.

Note: Some of the data points used here are estimates, while our sources provide other data. We believe that this is a 95% accurate reflection of the events that took place in March.

Chart 1: The Ctrack Freight & Transport Index and its sectors.

img1
parallax background

March 2020 Table of Freight & Transport volume changes:

% Change
Between
Quarter to March: 2020 vs 2019March 2020 vs February 2020 Quarter to Mar 2020 vs. Quarter to Dec 2019
Rail-2,6%-3,8%-2,7%
Road-10,8%-4,5%-4,1%
Pipeline0,7%-2,0%-0,5%
Sea-2,2%-5,5%-0,4%
Air-8,0%-23,0%-8,4%
Storage & Handling-3,0%-4,4%2,7%
Ctrack Transport
Freight Index
-7,1%-5,2%-2,7%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

February 2019 tables

% Change
Between
Quarter to February: 2020 vs 2019February 2020 vs January 2019Quarter to Feb 2020 vs. Quarter to Nov 2019.
Rail-2,8%4,3%-2,0%
Road-8,8%0,4%-4,6%
Pipeline2,5%-0,6%4,8%
Sea1,7%5,8%2,8%
Air-0,1%-3,0%-2,0%
Storage & Handling-0,8%-3,2%5,7%
Ctrack Transport
Freight Index
-4,8%1,0%-1,6%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

“Like all other businesses, Ctrack is feeling the pressure of CV-2019 in our business,” says Hein Jordt, Managing Director of Ctrack SA.

“We see the impact the virus is having on our customer’s especially small businesses. The stimulus package announced by President Cyril Ramaphosa creates some confidence in the short term. We trust the process of the stimulus can be rolled out speedily to stop the bleeding. We empathise with all businesses and wish them better health and business days going forward.”

March 2020 Transport and Freight Index Report

Released: 30 March 2020

South African freight volumes drop, albeit less than expected

The Ctrack Freight & Transport Index for February 2020 shows an overall freight volume decline of 4,8% versus the same period a year ago.

While substantial, the fall is less than the 5,1% decline in freight volumes reported in January 2020 compared to January 2019.

Graph 1: Recent performance of the different logistics sub-sectors, as recorded by the Ctrack Freight & Transport Index.

img1
img2

Coronavirus fears likely drove pre-emptive buying, which resulted in slightly increased storage volumes and inflated internationally linked sea and air freight volumes.

However, air freight the world over is in a steep decline and has been for a while.

The exceptions to the overall drop of 3,3% in world air freight volumes stem from improved volumes in Africa and Latin America.

As can be seen for some selected countries in graph two, air freight is a fragile sector which the virus impacted first.

However, there are reports that suggest air freight will benefit from emergency shipments of medicines and medical equipment needed to fight the pandemic in the short term.

Graph 2: Air freight volume changes versus a year ago in selected countries / airports.

The storage/warehousing sector reversed dramatically, from -8% to +0,8%, which we believe is a function of previously low inventories and attempts to mitigate supply-chain disruptions. 

It seems that the increase in storage volumes was primarily due to foreign freight arriving in South Africa. The only explanation we have at present is that the fear of running out was exacerbated by already low levels of stock caused by the weak economy.

The land transport sector remains in recession as the domestic economy continues to splutter. Road freight volumes, which makes up nearly half the weight of the freight transport sector, is close to recording a double-digit decline.

“The reduction in numbers were expected considering the growing fears of the Corona virus. As we are experiencing right now, the lockdown in SA will worsen matters during the next 3-6 weeks. What is positive is the stockholding that was increased due to Corona effect, and the current general stock in warehouses shows that SA could recover very fast once the lockdown is uplifted during April, says Hein Jordt, Managing Director of Ctrack South Africa”.

parallax background

February 2020 Table of Freight & Transport volume changes:

% Change
Between
Quarter to February: 2020 vs 2019February 2020 vs January 2020Quarter to Feb 2020 vs. Quarter to Nov 2019
Rail-2,8%4,3%-2,0%
Road-8,8%0,4%-4,6%
Pipeline2,5%-0,6%4,8%
Sea1,7%5,8%2,8%
Air0,1%-3,0%2,0%
Storage & Handling0,8%-3,2%5,7%
Ctrack Transport
Freight Index
-4,8%1,0%-1,6%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

January 2019 tables (adjusted)

% Change
Between
Quarter to January: 2020 vs 2019January 2020 vs December 2019Quarter to Jan 2020 vs. Quarter to Oct 2019.
Rail-1,7%-4,7%-3,2%
Road-6,9%-0,2%-4,2%
Pipeline-0,8%-3,2%3,8%
Sea0,4%-3,2%3,8%
Air-1,9%-3,2%-0,2%
Storage & Handling-8,0%0,0%-5,2%
Ctrack Transport
Freight Index
-5,1%-1,6%-3,5%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

January 2020 Transport and Freight Index Report

Released: 27 February 2020

Slowing world trade, load shedding take their toll on freight volumes

The Ctrack Freight & Transport Index shows that freight volumes are at their weakest levels since April 2016: down 6,8% for the year to January.

Furthermore, international data shows that world trade is slowing at its fastest rate since the 2008/9 recession. According to the World Trade Monitor, world trade volumes declined 1,3% on a year ago towards the end of last year.

The South African freight transport sector is exposed to the world trade cycle. Therefore, it should come as no surprise that the freight transport sector in South Africa is similarly reeling.

In addition, the China/US trade war has only been patched up by the phase one trade deal, while the breakaway of the UK from the EU is causing trade to slow in Europe.

Picture1
Picture2

Load shedding in December and January also played a role in South Africa’s freight volume decline, while simultaneously strangling the country’s retail industry.

Thankfully, fuel prices have been dropping. Oil prices are at their lowest levels in years, primarily due to the Coronavirus outbreak. Lower fuel prices helped arrest the decline in South Africa’s pipeline transport volumes (down 0,8% on a year ago.)

While sea transport volumes remained positive in January, the significant decline in the amount of bulk commodities handled is cause for concern.

While January volumes are unlikely to reveal much about the Coronavirus impact, China has over 30 million tons of steel in storage. This means that future shipments may be impacted. Moreover, for the last four weeks China has been using about 60% of the usual amount of coal it uses for producing power.

Bulk goods transport is down, with the Baltic Dry Index at its lowest price in over a decade. Break bulk volumes on the other hand have fared better.

This may be due to greater bulk imports that were - at least in part - for drought relief in South Africa and in neighbouring countries.

The Beira port in Mozambique is still not fully functional either and some goods are being sent to South Africa.

With uncertainty created by load shedding and lower manufacturing volumes, it is no surprise that the storage and handling sub sector has recorded the sharpest declines: -19,3% over the last year.

Road freight volumes have declined -7,3% although a slight increase in traffic to South Africa’s northern borders has been recorded. However, internal road transport is sluggish as results from listed logistics companies reflect.

Rail freight volumes did not decline as much as road freight and this is partly due to most rail traffic being bulk export commodities. However, one should expect rail freight volumes to remain under pressure.

Picture3

International air freight volumes into Africa remain positive according to IATA, although South Africa’s air freight volumes are in decline. Combining both local and international air freight volumes results in a volume decline of -1,9%.

parallax background

January 2020 Table of Freight & Transport volume changes:

% Change
Between
Quarter to January: 2020 vs 2019January 2020 to December 2019 and November 2019Quarter to Jan 2020 vs. Quarter to Oct 2019
Rail-7,3%1,0%-3,8%
Road-0,8%-3,2%3,8%
Pipeline-5,2%5,2%-0,3%
Sea1,5%-0,5%1,0%
Air-1,9%-3,2%-0,2%
Storage & Handling-19,3%-31,8%-15,8%
Ctrack Transport
Freight Index
-6,8%-5,3%-4,6%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.

December 2019 tables (adjusted)

% Change
Between
Quarter to December: 2019 vs 2018December and November 2019Quarter to Dec vs. Quarter to Sep 2019.
Rail-4,6%3,5%1,7%
Road-3,7%-3,5%*-3,1%
Pipeline-5,2%5,2%-0,5%
Sea3,5%-3,3%-3,1%
Air-3,6%7,7%-0,2%
Storage & Handling-12,7%20,0%-10,0%
Ctrack Transport
Freight Index
-4,7%2,2%-3,6%
Note: The row highlighted in blue is the main Ctrack Transport and Freight Index values used.
Picture4

While the Ctrack Freight & Transport Index shows declines across the board, transporters that are prepared and knowledgeable about their markets continue to have an easier time.

Ctrack is convinced that the best way to combat such declines is to have more information at one’s disposal. Real time information leads to better efficiency, while controlling costs. The current downturn is no different and the informed and innovative firms will make better use of opportunities that come their way.

“It is unfortunate that the latest freight volume figures seen in the Ctrack Freight & Transport Index reflect such a widespread downturn,” says Hein Jordt, managing director of Ctrack South Africa.

“Furthermore, the true scope of the Coronavirus outbreak on world trade is difficult to fully comprehend and quantify. Apart from lower freight and transport volumes, the endemic will no doubt also contribute to widespread stockholding reductions. Still, we trust that the Index will reveal better news soon and that global and local economies begin to get back on track quickly,” he concludes.

Note on the data

All comparisons for the Ctrack Freight and Transport Index and the main sub-sectors are calculated on a three month moving average and compared to the same three months on a year ago unless otherwise stated.

The above smoothing also applies to the World Trade Monitor and most other indices we use.

The idea is to create a uniform understanding and to help smooth out often massive month on month changes in items such as bulk and break bulk which can be influenced by the availability of ships or small stoppages. The smoothing and consistent use helps in better understanding the underlying trends.

We do however publish month on month changes for interest and would sometimes include this in our comments.

Data Sources: TNPA, ACSA, IATA, N3TC, TracN4, Bakwena, SANRAL, StatsSA, BER, SACCI, SARS, CPR (Netherlands), Drewry Shipping and GAC China, London Baltic Exchange, RWI Hamburg CEF.

December 2019 Transport and Freight Index Report

Released: 31 January 2020

Short ray of light seen in Ctrack Freight & Transport Index

Bad news for the economy mounted in the fourth quarter of 2019, which is evident in the latest Ctrack Freight & Transport Index. The Index shows that only sea freight volumes recorded positive growth during the quarter.

The freight volume decline of -4,5% over the last year is the steepest since May 2016 for the total logistics industry. The Index also shows an overall decline of five months when measuring on a year-ago basis.

The medium-term trend has been negative, too; only one month has experienced positive growth, while another has been neutral in the last year.

Sea freight volumes are positive due to a strong increase in breakbulk and dry bulk transportation. Coal, Iron Ore and Chrome exports are doing well. However, the number of containers landed and shipped are in decline. South African households are feeling the pressure of the weak economy and load shedding.

With both consumer and business confidence negative in the 4th quarter of 2019, most freight transporters are feeling the effects in tonnages and real income declines.

Land transport, which had maintained positive numbers until September for rail freight and October for road freight, has given way to year-on-year declines. In addition, pipeline volumes have declined -5,2% over the last year.

While airfreight volumes are in decline, there is evidence of stronger international freight growth into South Africa. This is due to the demand for consumer technology and may include high-value items such as cellphones and laptops.

The Ctrack Freight & Transport Index has indicated declining freight volumes for four months now on a year ago basis. This is not a long period of decline but is certainly hurting the industry.

chart-01

Short ray of light gives some hope

The good news is that December 2019 saw positive changes in five of the six sectors on a seasonally adjusted basis despite load shedding.

However, December is usually the main holiday month leaving one to wonder if it can maintain this strength beyond January. Nonetheless, the short-term trend is somewhat encouraging, particularly in terms of bulk goods volumes transported by rail and through the ports.

Lower outputs were likely recorded in December 2019 from manufacturing and mining. Some retailers have pointed to disappointing sales in December and the rise in inventories is likely due to misjudged sales expectations.

In this weak climate, it is vital that firms control costs with better route planning, security and right-sizing of equipment. More than ever, knowledge in the organisation will make a difference - from the drivers to the supervisors to the managers. Informed is prepared in this environment.

The impact of low confidence will mean those freight transporters who are prepared and informed about the wider climate as well as the micro details of their own firms, will have a better chance of survival.

chart-02

Sea freight volumes show where the economy is in detail

The Ctrack Freight & Transport index is made up of many small indices which allow for detailed discussions about the performance of the various logistics sub-sectors.

Sea freight volumes in the Index are comprised of containers, breakbulk and bulk lines. We include landed and shipped indices for containers but not for breakbulk or vehicles.

The fact that both landed and shipped containers declined over the last year indicates that South Africa’s higher value-added export sector is not able to gain traction beyond passenger cars.

At present, vehicle exports are growing but the number of containers shipped is in decline. As containers are more likely to house higher valued goods, the decline is at least partly due to a slowdown in the manufacturing of foods, clothes, higher-value steel products and the like.

Most containers landed contain consumer goods destined for retail shelves. However, consumers increasingly buy bargains, as shown by strong Black Friday and Cyber Monday sales.

Bulk commodities increased +10,4%, with coal and iron ore leading the way. The main destination for South Africa’s Iron Ore is China, while India takes the lion’s share of our coal.

With the Coronavirus outbreak impacting China, exported iron ore volumes may record a decline. The major bulk imported into South Africa is oil, which had a very small volume increase in the last few months.

Imports of breakbulk were up +14% in the 4th quarter. But, not all of this is necessarily good news, as these imports could be for drought-stricken parts of South Africa and its neighbours.

Export breakbulk volumes are not rising as quickly, but are still increasing. Breakbulk or general cargo is not normally of such high value that it needs a container, but is generally of higher value than bulk commodities.

Broad data shows that some mining can produce more or at least has stocks in reserves to maintain export performance.

Consumer imports are struggling, but vehicle exports continue to grow. Older data shows that vehicle import volumes are constrained.

parallax background

Table of Freight & Transport volume changes:

% Change
Between
Quarter to December: 2019 vs 2018December and November 2019Quarter to Dec vs. Quarter to Sep 2019.
Rail-4,4%3,4%-1,4%
Road-3,5%-2,9%-2,8%
Pipeline-5,2%5,7%-0,3%
Sea3,5%3,3%-3,1%
Air-3,7%8,3%-0,1%
Storage & Handling-12,6%22,2%-9,3%
Ctrack Transport
Freight Index
-4,5%2,7%-3,3%
Note: The row highlighted in blue is the main Ctrack Transport & Freight Index values used.
Also Note: All our year-to-year comparisons are based on moving quarters unless otherwise stated. This allows for better trend analysis of the Ctrack Freight & Transport Index.

October 2019 Transport and Freight Index Report

October Ctrack Transport and Freight Index tracks economy down

The Ctrack Transport and Freight Index continues to reflect the slowing nature of the South African economy.

According to the Index, all logistics sub sectors measured in South Africa, except road freight, recorded declines between August and October 2019 compared to the same three months in 2018.

Concerns must be mounting in boardrooms across the country as the economy struggles with slowdowns in manufacturing, mining and retail.

Road freight still showing positive growth

Road freight, the largest sector in South Africa by volume and value, increased 1% during the period from August to October 2019 versus the same time in 2018.

Short distance transport volumes of retail goods and FMCG are still expanding, while the continuous shift to online shopping is helping parcel delivery volumes. Black Friday and Cyber Monday will also prop up this category.

However, the strongest road freight income growth has come from the small furniture transport sector, which may have to do with emigration and families moving to more secure locations – even while home sales remain subdued.

Off the rails

Rail freight volumes declined -1,8% between August and October 2019 compared to the same period in 2018, which indicates that primary mining products are not being exported or used as much.

Furthermore, metal products have seen the largest decrease as a few medium-sized firms have closed in the last 12 months. The decline in metal products income in nominal terms was -6% and, although not all of this was in the rail sector, the knock-on effect to mining would have hurt the rail freight industry.

Air and sea freight volumes declined by -2,4% and -3,4% respectively between August and October 2019 compared to the same period in 2018. This reiterates the impact of a weak global economy and the trade war between China, the world's largest manufacturer and the USA, the world's largest consumer. Bulk commodity and container shipping are also in decline.

But, by far the worst performing sub sector has been storage. Manufacturers and internal traders are keeping stocks low as they expect trading conditions to worsen. Both the ABSA PMI and the Trade Activity Index from SACCI, show that role-players are concerned about the strength of the economy.

Added to this is the decline in the international storage of containers transhipped in South African ports. Transhipments declined a massive -19,3% between August and October 2019 versus the same period a year ago. While big shifts are not uncommon in the storage sector, it is concerning when all categories in this subsector are so negative.

The total decline of -14,3% in the amount of goods warehoused between August and October 2019 compared to the same period last year, is a relative indicator of the poor confidence that firms have of short-term economic performance.

Thankfully, interest rates are lower than before and are likely to drop further, reducing the cost of storage. Moreover, the shift to online shopping means that at least from that perspective (albeit small) the warehousing sector has a few positives to draw from.

However, the biggest factor in the broader logistics sector is the lack of confidence that goods will be sold relatively quickly, and that quick refilling of shelves will have to take place.

Retail price increases have remained below overall consumer price adjustments for about four years. In fact, retail prices have not increased over 3% for more than three years consecutively. This best reflects the fight that exists for the consumer’s pocket.

What’s in the pipeline?

Pipeline volumes declined -7% between August and October 2019 compared to the same period in 2018, mainly due to the decline in fuel sales volumes.

Overall, there seems to be no respite for the logistics industry, apart from the short boost to retail volumes thanks to Black Friday and Cyber Monday.

These two selling days may be strong enough to at least see a small improvement, but otherwise, the logistics sector will have to wait until next year. Ultimately though, throughout the supply-chain there are genuine concerns about low economic growth and price pressures.

parallax background

Table: The Ctrack Transport and Freight Index numbers % change

% Change
Between
Oct 2019 vs Oct 2018Aug to Oct 2019 vs 2018Sep 2019 to Oct 2019Aug - Oct 2019 vs May - July 2019
Rail-2,4%-1,8%-0.3%-4.6%
Road-0.2%1.0%-1.1%-2.5%
Pipeline-9.8%-7.1%2.8%-8.7%
Sea-1.7%-3.5%-3.6%-6.5%
Air-4.5%-2.4%-4.2%1.0%
Storage & Handling-14.3%-14.3%-0.1%-4.9%
Ctrack Transport
Freight Index
-3.3%-2.6%-1.1%-3.6%
The highlighted area shows the October Ctrack Freight and Logistics Index.

“In tough economic times, the cost of operating fleets can become a very difficult task,” says Hein Jordt, MD of Ctrack SA. “The need to provide competitive rates, while part of a fleet is not moving, presents transport and freight companies with additional challenges.

“Optimising fleet usage and keeping costs low cannot be done without the support of the type of systems and solutions that Ctrack provides. Ctrack believes that certain elements - risk, driving behaviour, productivity, optimisation and asset management - should be prioritised and given the most focus, which cannot be achieved without intelligent fleet management solutions.

“The trends presented in this month’s Freight and Transport Index show that government must look even closer at the supply chain industry, and support transport and freight companies with cost-effective road regulation policies

“Improved safety measures and economic policy that supports efficiency improvements, in conjunction with well-planned integration with our country’s transport and economic infrastructure, will allow us to be competitive in the global logistics market,” Jordt concludes.

September 2019 Transport and Freight Index Report

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

Ctrack Transport and Freight Index shows transport industry feeling the pinch

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

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. **


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. **