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.
An integrated alternative to road only or rail only transport does not exist in South Africa for domestic freight. This is in spite of the fact that national freight logistics costs are high, road infrastructure is challenged and concern for the environmental impact of road transport is increasing. These factors have renewed interest in intermodal transport solutions, which are the focus of this article. The question is whether a viable domestic intermodal solution can be found through segmenting freight flows and developing a business case based on these segments. The research confirms that this is possible and the segmentation and subsequent business case is presented. The results demonstrate that building three intermodal terminals to connect the three major industrial hubs -Gauteng, Durban and Cape Townthrough an intermodal solution could reduce transport costs (including externalities) for the identified 22.9 million tons of intermodal freight flows on the Cape and the Natal corridors by 64% (including externalities).
The purpose of this study is to quantify the marginal external costs associated with freight transport in South Africa. Six cost elements are included as externality cost items, namely, costs related to accidents, emissions, roadway land availability, policing, noise and congestion. Inputs in the calculations were a gravity-oriented freight flow model, a road transport cost model, actual transport costs for other modes, a warehousing cost survey, an inventory delay calculation and various national sources of information such as accident statistics and government budgets. Estimation techniques resulted in advances for externality cost measurement in South Africa. The quantification of the cost elements will be used to update the South African Freight Demand Model. The results show that the cost of transportation would have been 20% more if external factors were taken into account. The marginal rates of externalities can be used to develop scenarios based on alternative choices for South Africa's freight transport infrastructure configuration.
Background: Logistics costs are most commonly measured on a national level. An understanding of the provincial logistics landscape can add significant value both to provincial and national policy interventions; such measurements are however scarce. South Africa’s national freight logistics survey points to significant challenges in the structure of the freight transport market, most importantly the dominance of road freight transport on dense, longdistance corridors. The Cape Town-Gauteng corridor is the main economic artery linking the Western Cape province to the rest of the country.Objectives: The provincial government commissioned this research to develop an understanding of the province’s contribution to the national logistics challenges in order to alleviate both provincial and national logistics challenges.Results: The research results provide a distinct description of the key action required – to provide an intermodal solution for the dense flows of fast-moving consumer goods on the Cape Town-Gauteng corridor in order to reduce the significant transport and externality costs related to these flows and reduce exposure to exogenous cost drivers.Conclusion: Collaborative research between government and private industry into appropriate intermodal technologies must be prioritised within the ambit of South Africa’s socioeconomic environment. This shift can be further supported through the internalisation of road transport externalities to enable a total cost decision between modes, as well as through appropriate regulation of the freight transport industry.
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