The Freight Transport by Road Industry in South Africa 2023

Introduction

The impact of the pandemic on operations and revenue of the road freight and warehousing sector was positive and negative.

The benefits of transporting essential services were offset by protocol compliance requirements, low volumes, movement restrictions and border post congestion. Global demand for South African commodities has increased exponentially and supply chain management and logistics are vital ingredients for economic recovery. The sector is facing disruptions such as border and port congestion, violent assaults on drivers and torching of trucks, in-transit and warehouse cargo theft, rapidly deteriorating road infrastructure and increasing operating costs caused by volatile and fluctuating fuel prices and foreign exchange rates. The industry performed strongly in 2022, with volumes transported increasing significantly. It continues to benefit from the ongoing underperformance of the rail industry.

Opportunities

Demise of rail transport increasing market share for road freight operators.

Government investment in infrastructure projects should strengthen the logistics and road transport corridors and improve access to ports. If implemented, government economic stimulus projects will increase mining, manufacturing and agricultural outputs requiring transportation. Increase in ecommerce will increase demand for warehousing and logistics hubs. Infrastructure projects and regional agreements will increase trade in goods requiring transportation, harmonise customs regulations, reduce border post delays and improve road infrastructure. Minimal impact of the pandemic on the agricultural sector provides opportunities to grow the market. Opportunities for owner-driver, franchise schemes or subcontracting and empowerment partnerships as B-BBEE partners with large companies. Platform-based business models offer opportunities to new entrants.

Outlook

Major shifts in transport patterns due to the pandemic have had a key impact on road freight transport, and the way industry players have had to re-organise their businesses supported by logistics, to keep growing profits. Regulations were reviewed, and a revised White Paper on National Transport Policy incorporates changes and aligns the sector to international, regional, and continental transportation trends.

Growing trade, rapid advancements in technology and the rising role of ecommerce are expected to fuel the road freight transport market. There is demand for South African agricultural and mining products as well as motor vehicles. Retailers and logistics operators are pushing to improve their distribution models, reduce inefficiencies, and hold stock closer to consumers. Road freight transport faces major setbacks due to deteriorating road conditions, weather and traffic congestion, and increased long distance transportation and operating costs.

Report Coverage

This report covers the transport of freight by road and excludes the operation of terminal facilities, crating and packing for transport purposes, and delivery departments of warehouses operated by businesses for their own use, as well as furniture removal and relocation.

It includes comprehensive information on the state and size of the sector and factors that influence it, including the number of vehicles on the road, volumes, and the effect of the economy, trade and commodity movements and conditions in industries on which it relies. There are profiles of 30 companies including notable players Bidvest Freight, Imperial Logistics, Grindrod, Super Group, Value Logistics and Cargo Carriers as well as notable furniture removal companies such as Biddulphs and Elliott.

Strengths

Well supported by information technology and innovative technologies for logistics management.

Collaborative and mutually-beneficial industry partnerships streamline the supply chain process. Flexible planning of routes or intermediate stops. Globally-competitive multinational companies providing total supply chain service. It benefits other modes of transport via water, air or rail, as they require additional road transport to get the goods from the port, airport or train station to the destination or departure site. No other means of transport has access to a comparable infrastructure, and the range and flexibility of road freight offers almost unlimited possibilities for getting goods from one place to another. Not dependent on logistical hubs such as ports, airports, or train stations. Road freight, despite increasing costs, is still more efficient than rail freight due to existing infrastructure and comparatively low-cost transportation equipment. Road vehicles can be used for intermodal transport, where, when loaded, they can travel on ships or be transported by rail on special wagons preventing time-consuming reloading. The road freight industry is flexible and able to deliver goods door-to-door, and there is hardly any destination that is not accessible by road. Vast majority of goods moved in South Africa are transported by road.

Threats

Increased number of freight vehicles on the roads significantly increase chances of accidents and delivery delays.

Competition from road-to-rail programme. Impact of restrictive legislation. Increased automation could result in job losses. Increasing costs resulting from rising fuel costs, increased truck hijackings, carbon tax, toll fees and electricity constraints. New market players and competitors created by technological innovations that require no capital outlay in terms of warehousing and vehicles. Rapid deterioration of the road infrastructure and maintenance backlog will cause further vehicle damage and delivery delays. Volatile rand affects costs of fuel, imported vehicles, parts, IT systems. Vulnerability to global economy reduces demand for exports and payloads to ports. Weak economic growth, leading to lower mining and manufacturing production, reduces demand for transportation by road.

Weaknesses

Critical shortage of skilled drivers. Disruption to any other part of the chain could affect the sector. Fragmented and erratic nature of road freight can be unstable and unpredictable, and cause fluctuation of rates. Heavy loads are difficult to manage and convey by road and the capacity of vehicles is limited. High capital investment and operating costs, which are also deterrents to new entrants. High carbon, pollutant and noise emissions from vehicles are high. High concentration of freight transportation by road causes traffic congestion and damage to roads. High exposure to delays caused by adverse weather conditions, natural disasters, labour action, protest action, traffic congestion, vehicle breakdown, roadworks and poor road conditions. Highly competitive industry with low profit margins. Legal specifications, such as excluding transportation on weekends or public holidays, affect time flexibility. Less structured mode of transport than other modes. Road freight industry is affected by global and local trade and economic conditions. The costs of maintaining and expanding the road network are considerable and road freight is charged a share of the operating costs through toll systems. The road network cannot be expanded to an unlimited extent, and roads are overburdened in metropolitan areas.