The R480 billion industry that has flown under the radar in South Africa – until now

The R480 billion industry that has flown under the radar in South Africa – until now

With thousands of kilometres of road and rail, a wide sea network stretching across the 2,800km coastline and some of the busiest domestic air routes in the world, South Africa’s freight and logistics industry is unsurprisingly one of the biggest contributors to the country’s GDP.

However, because the industry is rooted in other sectors, the full extent of this contribution is often hidden from plain view.

Vehicle tracking and fleet management group Ctrack has now teamed up with economic experts at Economists.co.za to compile South Africa’s first freight and logistics tracker, which has for the first time painted a clearer picture of how big this industry actually is.

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,” Ctrack said.

“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.”

“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,” it said.

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, the group said.

State of logistics and freight in South Africa

According to the research, which is currently based on the limited resources available, South Africa’s total logistics volumes rose 3.1% in July 2019 compared to the same time last year.

This recovery is attributed to more stable electricity supply from Eskom, and largely driven by the country’s land transport sector, which is up 4.6% on last year.

Read more here

Source:    https://businesstech.co.za/news/business/337781/the-r480-billion-industry-that-has-flown-under-the-radar-in-south-africa-until-now/

Website:   https://businesstech.co.za/

Staff Writer – 31 August 2019

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