The Cargo Handling, Storage and Warehousing Industry in South Africa 2023

Introduction

Transnet reported that total cargo invoiced and volumes at its ports declined marginally from January to September 2022. The volume of goods transported by land has increased significantly. South Africa’s ports, roads and rail network face numerous challenges. The deterioration of Transnet’s freight rail system due to rampant crime and lack of maintenance has resulted in a decline in freight taken by rail. Logistics is also affected by corruption, strikes, political unrest and cyberattacks. Concern is growing about Transnet’s continuing failure to address port and rail inefficiencies and reduce its debt. The slowing global and local economy is expected to result in declining volumes of cargo handled at ports.

Opportunities

Capital investment and acquisition of specialised port handling equipment such as cranes, ship loaders and straddle carriers should improve port efficiency and reduce congestion. Government’s investment in special economic zones and revitalisation of business parks may stimulate cargo and warehousing demand, if these zones grow. Increase in ecommerce will continue to increase demand for warehousing. The African Continental Free Trade Area and Single African Air Transport Marketing agreements will increase connectivity and open up markets on the African continent. The opening up of Transnet’s rail and ports to private operators.

Outlook

Cargo volumes handled at South African ports are expected to slow in 2023 as economic growth slows. Grindrod said global markets are affected by inflation and showing low growth through to 2023. Transnet forecast that in the year to end-March 2023, it expected the number of containers and vehicles it handled to increase, bulk freight to grow by over 10% and break-bulk cargo to decline. However these figures may be lower, given downward revisions to economic growth forecasts, a strike and cable theft which have resulted in lower volumes of bulk freight railed from mines. Loadshedding and continuing operational inefficiencies of ports and rail are likely to result in further declines in the country’s logistics competitiveness.

Report Coverage

This report focuses on the loading and unloading of cargo, irrespective of the transport mode used, and the operation of storage and warehousing facilities for all kinds of goods, but excludes storage facilities operated by companies for their own use. It includes comprehensive information on the size of the sector, state of logistics, supply chains, road and rail transport, and influencing factors such as logistics inefficiencies, power cuts, corruption and crime and the road to rail strategy. There are profiles of 50 companies including Transnet, terminal companies such as Burgan Cape Terminals and the Durban and Richards Bay coal terminals, and operators such as Bidfrieght Port Operations, Supergroup and Value Logistics.

Strengths

Globally-competitive multinational companies offering end-to-end integrated supply chain services. Innovative systems and trends by the warehousing industry to adapt to complex warehousing operations. Low vacancy rates in the warehouse sector reflect the high demand by logistics and distribution companies for premium warehousing space close to ports and airports.

Threats

Corruption and crime. Global logistics delays. Increasing operational costs such as tyres, freight costs and fuel. Loadshedding Slowing economic growth globally and locally will reduce trade volumes. Strikes, political and social unrest. The declining performance of the country’s ports is increasing the attractiveness of neighbouring ports. The deterioration of freight rail through lack of maintenance and crime risk has resulted in falling rail volumes.

Weaknesses

As cargo handling, storage and warehousing forms part of the supply chain, disruption to any other part of the chain could affect the industry. Current insufficient port and terminal capacity and inefficient port operations. High capital investment and operating costs, which are also deterrents to new entrants. Lack of locally-registered shipping lines. Monopolistic status of the port and aviation industry resulting in inefficiencies and high tariffs and barriers to new entrants. Poor co-ordination of and collaboration between road, rail, air and sea transport modes leads to inefficiencies in the supply chain process. The business rescue of South African Airways and its subsidiary SA Express.