South Africa’s rising logistics costs: An uncertain future

Abstract

A country’s competitiveness can be severely hampered by an uncompetitive freight logistics system. During the first decade of the 21st century, two in-depth models were developed for South Africa which provide a framework for measuring and improving the country’s freight logistics system – the cost of logistics survey and the freight demand model. These models also allow for the development of scenarios for key identified risks. The objectives of this study were to provide an overview of South Africa’s surface freight transport industry,identify key risks to national competitiveness and suggest ways in which these risks could be mitigated. Freight flows were modelled by disaggregating the national input–output model into 372 origin–destination pairs and 71 commodity groups, followed by distance decay gravity-modelling. Logistics costs were calculated by relating commodity-level freight flows to the costs of fulfilling associated logistical functions. South Africa’s economy is highly transport intensive. Excessive dependence on road freight transport exacerbates this situation. Furthermore, the road freight transport’s key cost driver is fuel, driven in turn by the oil price. Scenario analysis indicated the risk posed by this rising and volatile input and should provide impetus for policy instruments to reduce transport intensity. As such, this study concluded that a reduction in freight transport intensity is required to reduce exposure to volatile international oil prices.

Sustainable production in emerging markets through Distributed Manufacturing Systems (DMS)

“…The development of South Africans total logistic costs and its components from 2006 to 2014 is represented in the figure. Logistics costs in South Africa are constantly increasing and are higher than the growth of Consumer Price Index; therefore logistics provider and industry are in front of a big challenge to compensate this cost increase (Havenga et al, 2014). Distributed manufacturing systems can help to reduce transport costs, due to a shorter supply chain, but also inventory and warehousing cost through localization and production-on-demand.…”

“…Example e Development of South African logistics costs from 2006 to 2014 index(Havenga et al, 2014).…”

MLP neural network-based regional logistics demand prediction

“…The literature [23] used the GM (1, 1) method to predict the freight volume of highway, railway, and waterway in the next three years in an article studying the prediction of industrial logistics demand. The literature [24] used gray relational analysis to select high-relevance influencing factors from many influencing factors, established a logistics demand index system, and used it as an input variable of LSSVM to establish a predictive model. In view of the relatively strong subjectivity of parameter selection in the application of least squares support vector machine (LSSVM), the literature [24] proposed to optimize the parameters of LSSVM by using the optimization ability of the dynamic acceleration coefficient particle swarm optimization (DACPSO) algorithm.…”

“…The literature [24] used gray relational analysis to select high-relevance influencing factors from many influencing factors, established a logistics demand index system, and used it as an input variable of LSSVM to establish a predictive model. In view of the relatively strong subjectivity of parameter selection in the application of least squares support vector machine (LSSVM), the literature [24] proposed to optimize the parameters of LSSVM by using the optimization ability of the dynamic acceleration coefficient particle swarm optimization (DACPSO) algorithm. Then, it used the LSSVM prediction method to predict the logistics demand and empirically proved that the model with DACPSO parameter optimization is more accurate.…”

The Decarbonisation of Transport Logistics: A South African Case Study

“…Logistics costs as a percentage of transportable GDP (primary and secondary sectoral GDP) have risen progressively since 2010, peaking at 46.7 per cent in 2013 (Havenga, Simpson, de Bod and Viljoen 2014). In South Africa, transport costs contribute 62 per cent of logistics costs (Havenga and Simpson 2013), compared to the global average of 39 per cent (Rodrigue, Comtois, and Slack 2009).…”