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Participating in the launch of the 6th State of Logistics™ survey on 16 March in Johannesburg: the CSIR's David King, survey editor, and Hans Ittmann, Executive Director of CSIR Built Environment |
South Africa is starting to show indications of recovery from the global economic recession. However, it will take time for visible signs of good, sustained growth to emerge. "The Soccer World Cup this year will provide a very welcome injection into the economy, but this won't be enough to support sustained growth," says Hans Ittmann, Executive Director of CSIR Built Environment in the 6th State of Logistics™ survey.
"Everyone in South Africa is gearing up for delivery during FIFA 2010. The logistics and supply chain fraternity has a huge role to play in ensuring that products - specifically food supplies - are delivered to the various major soccer locations as well as to all tourist attraction points across the country. Not only will this be a major challenge, it will also be a test of the ability of the logistics system to handle this critical event successfully," comments Ittmann in the survey.
Launched in mid-March 2010, the 6th State of Logistics™ survey highlights the importance of the critical area of logistics and supply chain management in the world marketplace. The survey aims to provide a comprehensive picture of the state of logistics in South Africa, incorporating a macro-economic view (top-down) and an industry-level perspective (bottom-up). Since the publication of the first annual State of Logistics™ survey in 2004, this document has become one of the premier references for logistics in South Africa.
The CSIR and its associates - Stellenbosch University and IMPERIAL Logistics - believe the surveys open the way for further discussions, interactions and dialogue on various logistics and supply chain management issues.
This year, the survey emphasises the value that can be derived from logistics. Global pressures remain to reduce logistics costs, while increasing emphasis is being placed on providing quality service and adding logistics value.
The total logistics costs in South Africa for 2008 were R339 billion - an increase of 6,9% on the 2007 amount of R317 billion. The logistics costs as a percentage of the GDP are 14,7%, which is the lowest they have been since the first survey in 2004. Compared to other countries, the logistics costs as a percentage are still high - in the USA the percentage for 2008 was 9,4%.
The local situation regarding freight is exactly the same as in the past number of years. Total freight in 2008 increased slightly with 2% or 32 million tons, with all growth being on road again. "This is not ideal - not only is this the main contributor to high transportation costs, but heavy vehicles are damaging our road infrastructure," explains Ittmann in the introduction to the 6th State of Logistics™ survey.
The recent World Bank report on logistics competitiveness is encouraging from a South African point of view. "Although we are now positioned 28th out of 155 countries as opposed to 24th in 2007, the actual LPI (Logistics Performance Indicator) score has improved from 3,53 to 3,46. When high-income countries - such as Germany and the USA - are excluded, South Africa ranks amongst the 10 most significant over-performers in the logistics field, based on the income of the country. Included in this group are China and India," comments Ittmann.
The survey furthermore highlights the need for improved road conditions to reduce logistics costs, showing the effect of bad roads on total costs. Findings from a case study show that worsening road conditions can substantially increase maintenance and repair costs of freight trucks and vehicles. Total vehicle maintenance and repair can increase by as much as 121% for a truck travelling on a road with a bad condition rating, with an increase of as much as 10% in total logistics costs of a company.
While South Africa's national roads are in a reasonable condition, the roads that are the responsibility of provincial and local governments are deteriorating at an alarming rate. The percentage of bad and very bad roads in the secondary road network of South Africa increased from 8% in 1998 to 20% in 2008, while many deliveries are routed on this road network. It is therefore vital to create awareness of the potential negative impacts of bad roads amongst stakeholders to ensure that proper attention is given to timely and proper maintenance of roads.
In the survey, Marius Swanepoel, CEO of IMPERIAL Logistics, comments on costs associated with 'green' supply chains. "The drive towards green supply chains need not be a financial burden, since principles of optimally managed resources, energy and waste reduction have decreasing cost implications. Not only do green strategies speak directly to the bottom-line, but can also provide a competitive advantage as consumers and regulations start demanding greener products and manufacturing practices. The survey highlights the importance of balancing aspects such as cost and sustainability as we strive towards creating a more competitive South African economy."
When disasters such as the earthquake in Haiti strike, logistics and supply chain management is an integral part of relief operations. It constitute almost 100% of the effort to assist the affected country. In the survey, the CSIR argues that the scope of humanitarian logistics in South Africa be expanded to include activities targeted at socio-economic development issues such as illiteracy, crime, abuse, unemployment and the increase in orphaned and vulnerable children. This argument is substantiated by the magnitude of the negative impact these matters have on the population and the national economy.
See the media statement on the 6th State of Logistics™ survey and the full survey
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