Logistics sector grows – for now
Logistics sector grows – for now
The overall logistics sector continues to show tremendous growth with year-on-year increases of 26,4%. This might be from a low base due to the hard lockdown in 2020, but the quarter-on-quarter growth reveals increases of 4,2%.
This is according to the Ctrack Freight Transport Index. During the last year, every single sector measured by the Ctrack Freight Transport Index recorded positive growth. Pipelines – with 2% – showed the smallest gain, while air freight – growing 86,6% in the last 12 months – showed the greatest. It must be noted that air freight also suffered most significantly during the hard lockdown. So, while this growth might seem massive, it is truly just a return to normal.
The quarter-on-quarter improvement in the Ctrack Freight Transport Index bodes well for second-quarter GDP growth at present. It seems like economic activity was relatively strong in the second quarter, although the improvement could have been due to higher export prices and some catch-up of other economic activity after the harder lockdown in the first quarter.
But all is not as good as it seems. “While growth in the majority of sectors measured by the Ctrack Freight Transport Index is great to see, unfortunately, a variety of external factors will see this growth stagnate or even decline in the short term,” warns Hein Jordt, managing director of Ctrack SA.
Road freight recovers!
Business in general has not yet returned to pre Covid-19 levels. Only road freight has fully recovered and surpassed previous levels – mainly to the detriment of rail freight, which still struggles along.
Rail transport is still about 16% off its previous highs due to factors such as derailments on the coal line and problems on other lines that continue to hurt the sector. Sea freight is very near to previous levels.
The current performance of the Index is based on data from June, and it is expected that the looting and Level 4 restrictions experienced during July will have a negative effect on various sectors, including air and sea freight and naturally road and rail freight too.
Jordt warns that the recent closing of the N2 and N3 and Transnet Ports due to looting and unrest will most definitely mean that the Index for those sectors will show month-on-month declines in July and August.
“In fact, the effect that the recent unrest will have on the entire transport sector is concerning. The knock-on effect of road and port disruptions will include negative impacts on rail, pipelines and perhaps even air freight. The effects of the riots and lockdown Level 4 have not yet been felt, and we will have to wait for the July numbers before we can truly ascertain what effect it all will have on the transport industry,” he notes.
“While the recent unrest was frightening to see, it once again highlights the need for a reliable tracking and fleet management solution. Ctrack offers a wide variety of bespoke solutions for every industry. These solutions will ensure that vehicles and cargo are always visible and contribute to increased safety and ability to plan around any delays,” he adds.
Container traffic is growing – but less than globally
Since 2010 South African container throughput has increased by 19%. This, along with recent growth in exports, leads us to believe that South Africa has hit an international trade sweet spot.
A 19% improvement in 11 years is a far better performance than the overall SA economy, which only experienced an increase in GDP of 3,6% over the same period. It is however well below the global average. Global container throughput increased by 52% over the same period. A contributing factor to the slower local growth is that South Africans have become poorer in real per capita income. “We can no longer afford as many imports as was possible before 2014, and this has also had an impact on the throughput of containers,” explains Jordt.
In the quarter ending in June, South African ports handled over 13 000 Twenty-foot Equivalent Units (TEUs) a day. More than half of the total containers passing through South Africa are handled by the port of Durban, which moves approximately 4 150 containers per day. This equates to three containers a minute that need to move in the port of Durban.
While the numbers are impressive, it shows the serious problems Transnet Port Terminals faces when it must carry out manual loading and sorting due to factors such as a recent computer hack.
“Doing this by hand and (armed only with walkie talkies and a spreadsheet) is not possible. No one person can reliably replace a computerised system that handles thousands of containers and trucks every day and ensure that all containers are loaded onto the correct truck or ship,” explains Jordt.
“The recent delays at the ports will have a further negative effect on the road and rail freight sectors, which will, in turn, have a negative effect on the overall Ctrack Freight Transport Index as well as the South African economy as a whole,” he warns.
Let’s hope that the next Ctrack Freight Transport Index doesn’t paint too dismal a picture.
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