Global supply-chain disruption continues while SA buckles under fuel weight

The global supply-chain disruption continues while the local supply chain is under pressure from criminals and from Wednesday, higher, never-seen-before fuel prices. Ships are waiting outside harbours for up to five weeks to offload their cargo and some wealthier industrial nations are using cargo planes to “ship” urgently needed components.

According to the Ctrack Freight Transport Index for the third quarter, the international transportation of goods remains under pressure, while local attacks on the logistics infrastructure had a negative impact on the entire transport sector.

The Index declined by 0,6% compared to the second quarter and will probably be reflected in the overall third quarter gross domestic product (GDP), as transport is a co-incident indicator.

“Although the increase of freight transport compared to a year ago is a very respectable 8,9%, down from an adjusted 11% the previous month, for the whole industry, one must not forget the low base that this represents as South Africa was then bouncing back from the multi-decade lows experienced during the second quarter of 2020,” Hein Jordt, managing director of Ctrack SA, says.

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Global supply-chain breakdown clearly visible

He says the world’s supply-chain breakdown is clearly visible in the decline of air and sea freight.

“It is no longer strange to hear of ships that are delayed for over five weeks as they need to wait for freight to be loaded and then again when they need to offload at their destination.”

The index shows that air freight declined by 11.6% and sea freight by 5.6% in the third quarter. Covid-19 had an immense impact on air freight and international passenger transport and normality is expected to return only in 2023.

Jordt says complex product manufacturing has been the hardest hit by these supply-chain disruptions as solving one supplier shortage exposes the next product shortage. Some factories are literary in a stop-and-go situation which causes further delays downstream.

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South African supply-chain disruption

In addition, South African transport sectors are under pressure from criminal elements.

“The onslaught on business in the transport sector is relentless, with supply chain and criminal elements the biggest contributors to stunting any possible growth.”

He points out that South Africa continues to experience attacks on infrastructure, with Transnet recently reporting the theft of 130km of cable in the four weeks ending on 22 October in addition to another 322 incidents of damage to infrastructure such as actual rail, signals, stations and level crossings.

Road freight also remains under attack, with at least 22 trucks destroyed during October. Damage to pipelines also causes regular delays with frequent leaks in the main pipeline between Durban and Gauteng. Unexplained fires in some ports also show that the transport sector is very vulnerable to sabotage.

Jordt says much of the infrastructure coming under attack is outside populated areas or cannot be seen from populated areas or busy routes.

“The closing of cases and successful conviction of perpetrators is dismal because witnesses are hard to find and the perpetrators slip away too often. Lives are also lost in the industry.”

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Small decline an achievement

The relatively small decline in the Ctrack Freight Transport Index is therefore an achievement and shows the industry’s resilience, Jordt says. Road freight continues to gain market share as rail freight struggles against the cost increases from reverting to diesel locomotives and signal problems.

“While road freight declined over the last month, it remains close to its all-time high and increased with 0.5% during the third quarter. However, every transport sub-sector is feeling the impact of the unusual concertina effect created by the global supply-chain disruptions.”

The petrochemical industry is also experiencing its own problems. The strong positive change in pipeline volumes reflects the low base of the second quarter as the oil and fuels in storage were most probably enough at that time. The 10.1% increase on the eve of a massive fuel price hike, indicates that many users are filling their tanks to avoid the pain at the pumps.