SA’s good outlook for road freight in 2023

The biggest challenge to hit the road freight industry this year has been the soaring number of violent attacks against the road freight logistics chain.

In some cases these have led to complete delivery routes and specific supply chains being stopped, rerouted or entirely lost to the country.

This is the primary finding of a report by the Road Freight Association (RFA) on the industry, providing an overview of the past year and a forecast for what 2023 holds.

“Perishable goods have been destroyed, ship sailings missed, which in turn have cost the country millions (if not billions) of rand in lost revenue. Some industries have shrunk while others have closed their doors,” said RFA CEO Gavin Kelly.

He said the “Ukraine Affair” brought home two stark truths: most economies are built through reliance on petroleum-based fuels and products, and global food supply chains are vulnerable.

The RFA report titled “Road freight logistics – past, present and future: an overview of what was and a forecast for 2023” found fuel supply shortages have led freight and logistics companies to look at alternative fuel/energy resources with long-term technologies being piloted.

However, by far the most worrying trend has been crime. This was seen in an increase in apparent organised attacks on the country’s supply chain,

“Specific cargoes are targeted (recent reports on the rampant theft of coal within the mining and electricity supply sectors, for example), attacks on agriculture (both in the field and when harvesting occurs), pinpoint activities relating to high-value goods (liquor/electronic goods/foodstuffs) and the continued hijacking of vehicles (for parts/resale /industrial sabotage),” the report stated.

Opportunistic looting during public unrest and increased plundering of links in the supply chain — warehouses, distribution depots, retail outlets, road freight vehicles and associated intermodal facilities (like ports and terminals where goods are concentrated) — have prompted concerns that the attacks are organised rather than coincidental.

“Vehicles are frequently stoned for no apparent reason (other than to stop so looting can occur or to voice displeasure about some issue totally irrelevant to the road freight operator).”

Failures by government to properly manage and secure ports and infrastructure corridors, compounded by a lack of implementation and managing of legislation relating to employment and immigration, were added major concerns.

Another challenge has been the cost of fuel. In December 2021 diesel cost R17.92 per litre at the coast and R18.05 inland, rising by 33.4% to R24.23 and R23.92 in December this year.

“Sadly the association has taken note of transporters who were not able to continue operating due to the continued fuel price increases,” the report stated.

“Whether we liked it or not the continuous increases in the price of diesel inevitably drove up the cost of transport and logistics month by month. With roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there were increases to consumers as transport costs increased.”

Many transporters had their reserves built up over years drained through the Covid-19 lockdown period and these have not been replenished.

However, the outlook for 2023 was good, with fuel reportedly heading “for another solid reduction” of about R2 per litre of diesel in January.

“There are signs of many ‘green shoots’ which will assist with a slowing down of the rate of increase of inflation, and thus the relaxation of the stiff increase trajectory of the repo rate.

“More importantly, there will be a marginal increase in the return on investment for all those who are economically active, and the growth of small business will stand a better chance.”

The report found the economy to be improving at a far faster/more resilient rate than initially expected, something that will result in higher demand for consumer goods and stronger logistics demand.

“The demand to replenish inventories has remained strong, which is further supported by market growth, pushing consumption levels upwards. Transporters will feel this impact in the demand for transport.”

The development of the Africa free trade area is expected to boost industries and manufacturing that export, with road freight the backbone for much of the development infrastructure and the trade.

The conclusion: “All in all 2023 looks very promising. Road freight will be there to play its part, to support growth, to ensure goods get to their respective destinations, and to continue to bring local and regional beneficiation to our families, communities and economy as a whole.”

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