The outlook for the transport and logistics sector is grim with more players expected to consider exiting unprofitable parts of their businesses, or focusing on consolidation. “South Africa is in a sluggish economic period and freight rates are continuing to slump which leads me to believe that more transport operators will close their doors,” said economists. co.za’s Mike Schussler. This follows recent news that the Barloworld Group is considering exiting from Barloworld Logistics amid “tough economic trading conditions locally”. MD of Barloworld Logistics, Kamogelo Mmutlana, has since outlined the division’s turnaround strategy to FTW, noting that it is “pulling out all the stops” to ensure the continuation of the division. The group is expected to make a final decision on the future of Barloworld Logistics by September next year. Schussler told FTW that if a player like Barloworld exited the logistics space, logistics rates could move up a little until new companies filled the gap. “Transport is a tough industry and we need to make it work in SA as the country relies so much on road transport.” He said there was “a real concern” that rail no longer served much of South Africa’s rural areas. To survive the tough times, Schussler predicted that road transport operators might consolidate their businesses. “Furthermore, freight forwarders face ever-increasing competition from online platforms and some shipping lines are very low in their pricing, so the logistics sector needs some consolidation – probably in most countries, not just South Africa,” he said. Schussler believes that some specialised logistics players will be okay because of the niche service they provide. “But the general freight arena is going to be a hardknock place,” he said.
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The general freight arena is going to be a hard-knock place. – Mike Schussler
