Transport management needs macroeconomic approach, urges logistics professor .

South Africa is a transport challenged country and, although transport-related issues should be a government priority, this is not the case and government has not yet mastered managing transport and logistics from a macroeconomic perspective, Stellenbosch University (SU) logistics professor Jan Havenga told delegates at a recent meeting of the Transport Forum, in Durban. Print Send to Friend 1 0 He added that a great deal could be gleaned from the Logistics Barometer launched by SU’s Logistics Department earlier this year. The barometer measures logistics costs as a percentage of a country’s gross domestic product (GDP) and unpacks this to reveal critical trends. MORE INSIGHT Creamer Media publishes Road and Rail 2015: A review of South Africa’s road and rail sectors (PDF Report) “There is a need for fixed cost measurement in South Africa. If you can measure it, you can do something about it,” he said, adding, however, that this needed to be taken further, as not all costs had been sufficiently disaggregated. He noted that, the average for logistics costs as a percentage of GDP in first world countries was below 10%. Many of South Africa’s trading partners were driving down costs, with the US, for example, moving from 15% 15 years ago to around 8% at present. South Africa’s logistics costs equated to about 11.4% of GDP and were rising, he warned. Explaining why South Africa needed to prioritise transport-related issues, Havenga revealed that, while South Africa accounted for just 0.4% of the world’s GDP, 0.6% of the world’s road network and 2% of its rail network were in South Africa, which also accounted for 1% of the world’s tonne-kilometres. Further, 1.3% of the world’s liquid bulk trade and 5.5% of its dry bulk trade originated in South Africa. He said he had not seen a single transport indicator where South Africa was lower than the world average. This meant that South Africa was a spatially and transport challenged country where transport needed to be managed from a macroeconomic perspective. “But, I’m not sure that we do that,” he said. He pointed out that, when analysed, transport-related percentages were more concerning. For example, when services were taken out of the equation and just physical goods were examined, South Africa’s logistics cost average jumped to about 50%. This meant that 50% of the landed value of anything consumed (including the growing, milling and beneficiation of a product such as maize) was transport. Havenga unpacked South Africa’s annual logistics costs of R470-billion for 2015, noting that this was heavily weighted toward transport, with direct transport costs making up R273-billion (58%) of the total figure. The world average is 45%. Of the total, R64-billion (14%) was attributable to warehousing, R68-billion (about 14%) to inventory carrying and R62-billion (13%) to management and administration. At present, he said, it was not yet clear what portion of that could be attributed to port costs and he called on all stakeholders to assist with a study taking place over the next two months to determine this. Looking at what could be done about high transport costs, Havenga said the emphasis had so far been confined to the supply rather than the demand side. The former covered things such as improving trucking efficiencies through training drivers, better managing fuel consumption, improving driving habits, improving logistics efficiencies, better scheduling, increasing collaboration, lowering empty haul and facilitating modal shifts. On the demand side, he said, trade reduction and less use of ports, reducing consumer choice, producing and consuming products locally to reduce reliance on imports and reducing waste, would contribute to bringing down costs. He added that calculating the contribution – and hence the possible management – of maritime costs would not be straightforward. Referring to a recent tour of the Durban port, Havenga noted that, even though it was “a quiet day”, there were long queues of trucks waiting to enter the port with front-of-port delays such as this likely to have a significant impact on costs. Long waits meant the number of loads per truck would be diminished, pushing up transport costs of all goods carried in a particular vehicle rather than one particular load. Delays would also push up inventory costs, increase safety costs owing to unpredictability and increase administration costs. He said that on the spot “head accounting” suggested that delays could cost the country between R2-billion and R5-billion a year – although this would need to be formally verified. Havenga added that delays for ocean liners either waiting to enter the port or taking longer to load would also push up costs across the board as one less working day would increase fixed costs.

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