Key challenges in the South African road freight sector- CSIR

On Wednesday, June 18, 2013, the Council of Scientific and Industrial Research (CSIR) in accordance with Imperial Logistics and the Stellenbosch University launched the ninth State of Logistics Survey in Johannesburg, which obtained data from a broad range of industry and government stakeholders and identified the key challenges in the South African road freight sector.

Respondents felt that poor road conditions (64%), the cost of fuel (52%) and a lack of law enforcement and prevalent non-compliance (43%) are the top three challenges in the industry. The condition of the country’s roads is also regarded as a critical cost driver by 73% of the respondents.

The survey furthermore reports that the contribution of poor road conditions to fatal accidents shows that the effect of bad roads stretches much further than increased vehicle operating costs. Road-related factors contribute to 5–15% of fatal road accidents, of which 28% can be attributed to poor road surface conditions. The total cost of fatal accidents caused by poor road conditions in 2010/2011 is estimated at between R207 million and R621 million.

The following areas were also highlighted:

The contribution of transport costs to overall logistics costs in 2012 is pinned at 61%, the highest it has been in the past nine years and far higher than the global average. The vulnerability of transport costs to a volatile cost driver – the price of crude oil – and South Africa’s entrenched dependence on road transport does not bode well for the economy.

SADC could become a world-class transhipment community due to its geographic location. South Africa and Mauritius currently rank 39th and 50th, respectively, out of 157 coastal countries in terms of maritime importance. Immense potential and business opportunities exist in southern Africa in terms of natural resources, low-cost labour and a rapidly growing consumer market. However, the top three constraints to doing business in Africa are unavailability of reliable service providers and partners; lack of adequate infrastructure; and long transit times and unreliability.

The National Development Plan, now adopted by the South African government as its development plan for the future, clearly states the tremendous challenge the country faces by effectively missing a generation of capital investment in infrastructure. South Africa is not unique; around the world, inadequate or poorly maintained infrastructure presents major economic challenges, competing for scarce resources from governments already struggling financially.

Public-sector funding for all infrastructure projects is estimated at R844.5 billion for the 2012/2013—2014/2015 period, with Transnet to invest a further R300 billion in rail and port developments over seven years starting in 2012. However, private-sector involvement is non-negotiable for the success of transport infrastructure projects – both from a funding and planning point-of-view.

The unavailability of a skilled workforce is viewed as one of the key constraints to the expansion of business operations in South Africa. This appears to be a global problem with 39% of businesses around the world struggling to recruit the appropriate people. Nearly two in five businesses (37%) in the BRIC (Brazil, Russia, India and China) economies believe an inability to get the right workers will dampen growth in 2013. It has thus become critical to identify the logistics skills requirements in South Africa so that these acute shortages can be addressed to the benefit of trade in and with South Africa and SADC.