Consumers must play a role in logistics re-engineering

Logistics in South Africa will
have to change if escalating
costs are to be brought
under control.
According to Professor Jan
Havenga who pioneered logistics
costs research at the University
of Stellenbosch (US), consumers
are going to have to learn to make
do with less. “We have to change
our demand profile. Costs are
continuing to escalate and unless
we make some drastic changes it
will simply become too expensive.”
He said in countries around the
world where logistics costs were far
lower than in South Africa, one of
the key reasons was better logistics
demand management.
“We have a geographically
widespread economy that requires
commodities to cover vast distances
to service demand. In the context of
already high and escalating input
costs, our demand for logistics is
just too high,” he says. “We have
to ask ourselves if we really need
100 different kinds of soap in every
supermarket across the country. Do
we need to service this demand or
must the demand change?”
He says in Europe the changes
being made by consumers are
already
being felt in
the logistics
industry.
“It is an increasing trend to
no longer eat out of season.
The Northern hemisphere is
moving towards
importing less
out of season
goods because of
the high carbon
footprint.
There is also a definite move
towards consuming more
locally produced goods and
reshoring manufacturing
industries which means
less goods have to be
transported further afield.”
According to Havenga, these
are just a few changes that can be
made to address the demand for
logistics. Equally important is the
efficiency of
the way in
which the
industry
supplies logistics services
– modal choice, transport
efficiency and labour
productivity remain
critical elements in the
South African landscape.
“Ultimately we have to
take a very close look at
what we are doing and
how we are doing it. We
will, as a country, have to
decide what we are going
to change and how to
change it. But we can’t
keep on doing what we
are doing.”
The Logistics Barometer
South Africa 2015, launched by
the US earlier this year, calculated
logistics costs up until 2013 and
found that they equalled 11.1% of
the country’s GDP. The Logistics
Barometer is a continuation of
research previously published in
the State of Logistics survey for
South Africa by the Council for
Scientific and Industrial Research
(CSIR). “This publication has
a far keener focus on the cost
drivers and industry behaviour
that shape logistics costs. We
want to highlight key insights
that industry and government can
act on in a meaningful way,” says
Nadia Viljoen co-editor of the
Logistics Barometer.
“We do not compare well to
developed regions like North
America and Europe whose
logistics costs are estimated
at 8.8% and 9.2% of GDP,
respectively. On the other
hand, compared to South
America (12.3%) and other
developing regions we are
quite competitive,” says Zane
Simpson of US. They expect
the percentage for South Africa
to have increased in 2014 and
forecast a further increase in
2015.
With a transport-intensive
economy Havenga says transport
costs make up the most
significant portion of logistics
costs in the country, but this
year’s research points out that
the impact of inventory-carrying
cost and warehousing costs
should not be ignored.