Cost of Logistics Services Rising – CSIR

The Council for Scientific and Industrial Research (CSIR) launched its tenth State of Logistics Survey in May 2014.

The survey highlights that macro-economic issues, such as the Structure of the South African economy, balance of payments, budget deficits and the human resource problem affect the economy as a whole, which influences the demand for logistics services.

It adds that the cost of logistics services in South Africa plays a crucial role in the countries ability to be competitive on a global basis.

The survey takes an in-depth look at logistics costs from 2012 to 2014  and notes that In 2012, the cost of  logistics was R393-billion compared to R423-billion in 2013 and is estimated to be R456-billion in 2014 or R470-billion should fuel inflation reach 15%. It warns that logistics costs could be even higher should fuel inflation exceed 15%.

Logistics costs as a percentage of GDP have remained at a stable level of 12.5% for 2011 to 2013 owing to the growth in the tertiary sector,” the survey reports, adding, however, that logistics costs as a percentage of transportable GDP have grown significantly over the past four years, which is not so much the result of deteriorating efficiency  but owes to the disproportionate growth in cost drivers, such as fuel.

Changing Logistics Services Costs Trends

More than just operational efficiency is needed to change the current trend of underlying cost drivers in the logistics industry. The CSIR notes that integrated issues stifling the economy need to be addresses  and bold steps need to be taken to mitigate these risks. It further stresses the need for stronger and bolder supply chain management.