In South Africa, logistics optimisation is largely managed from a microeconomic perspective. This paper makes the case for macroeconomic logistics measurement, presents the results of the country's national logistics cost model and proposes the first key macroeconomic logistics indicators for South Africa.The research shows that South Africa's logistics costs are higher than the global average. The majority of these costs are attributable to road transport, of which the biggest cost driver is fuel, which in turn is determined by volatile oil prices. This poses a significant exogenous risk to logistics cost management in South Africa. The risk can be mitigated through a structural adjustment in long-distance freight transport (from road dominated to rail dominated). The paper concludes by proposing two key macroeconomic logistics indicators to facilitate this process. JEL Classification: C82, L92, R41, R48
Purpose – South Africa's logistics cost measurement was expanded to include externality costs, and scenarios based on the key exogenous risks were developed to inform mitigation strategies. This paper aims to discuss these issues. Design/methodology/approach – The research approach is quantitative, based on a gravity-orientated freight flow model, a road transport cost model, actual transport costs for other modes, a warehousing cost survey, an inventory delay calculation (to inform warehousing cost calculations and inventory financing costs) and an externality cost calculation. Findings – Transport cost pressures are expected to deteriorate due to the increasingly negative outlook for the oil price and the internalisation of externality costs. The nature of these forces compels transport cost challenges to be addressed strategically through collaborative, industry-wide and even nationwide initiatives. Research limitations/implications – Key limitations are inconsistent commodity classification schemes across information sources, and incomplete container content data. The researchers are collaborating with information providers to address these issues and refine model accuracy and forecasting. Practical implications – The exogenous risks strengthen the argument for new approaches to South Africa's logistics cost challenges driven by the high densities of corridor freight flows. Social implications – The inclusion of externality costs highlighted the negative environmental impact of the current modal configuration and provides impetus for change. Originality/value – Major advancements to logistics cost modelling were made by incorporating externality costs and developing scenarios for risk mitigation. Freight flow data granularity (in excess of one million records) allows both aggregation to national-level intelligence to inform policies, large-scale infrastructure investments and industrial positioning, and disaggregation to enable practical application.
Background: The components of national freight logistics costs are still optimised in isolation, instead of systemic optimisation between logistics and other supply chain elements. The risk is the tragedy of the commons effect, where a positive return for economic activities in isolation could lead to a negative collective result in the long-term. Therefore, there is a need to elevate the systemic view of logistics to the macroeconomic realm.Objectives: The primary objective of this study was to further the macrologistics discipline through its formal definition and to develop an instrumentation construct to support macroeconomic trade-off analysis. The secondary objective was to apply instrumentation outputs to national-level logistics challenges.Method: A review of macrologistics was conducted, followed by a discussion on macrologistics instrumentation, which is twofold: a freight-flow model and a related logistics costs model. A disaggregated national input–output table was developed, followed by gravity modelling, to determine freight flows. Logistics cost calculations relate these flows to the costs of fulfilling associated logistics functions.Results: This review contributes to the developing theory of macrologistics, while the instrumentation outputs improve the systemic understanding of the national freight-flow landscape, enabling informed debate and prioritisation analysis. This systemic view enabled macrologistics proposals to address South Africa’s logistics challenges, including proposals regarding a domestic intermodal strategy externality cost internalisation; international trade facilitation; infrastructure investments; and rail branch line revitalisation.Conclusion: The elevation of logistics to the macroeconomic realm will enable the management of logistics as a national production factor, thereby contributing to reducing national freight logistics costs and improving national competitiveness.
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