Ina Opperman

By Ina Opperman

Business Journalist


Transport and logistics on the mend, but load shedding, inflation still hurting economy

Although the transport and logistics sector is recovering after the April floods, load shedding, inflation and higher interest rates still put the brakes on economic growth.


The transport and logistics sector is picking up but still has a long road to recovery ahead, after the floods in KwaZulu-Natal which devastated the Durban-South area, causing major disruption in the Port of Durban, the fourth largest in the Southern African Development Community (SADC) region.

The overall Ctrack Transport and Freight Index for April 2022 declined by 0.4% compared to March, but was still up by 8.6% compared to a year ago, although this represents a setback compared to March’s strong 12.4% year on year increase, says Hein Jordt, CEO of Ctrack.

According to the Index, three of the six sectors it measures declined in April, with the biggest contractions in sea freight and rail, both particularly hard hit by the floods as it also affected surrounding roads, forcing activities to a halt for a few days.

What made it worse is that the port is the primary multipurpose gateway to the main economic hub of Gauteng, with a key focus on containers, automotive and liquid bulk transport. It is critical for the stability of the South African economy.

ALSO READ: Supply chain issues also affect food quality and safety

Logistics and sea freight

Container handling dropped by 22.8% in April compared to a year ago, while other cargo handling, excluding vehicles, dropped by a significant 16.8%.

However, it must be noted that the Ctrack Transport and Freight Index is calculated on a three-month moving average, which softens the impact somewhat.

Sea freight declined by 7.8% in April compared to a year ago, the biggest decline since August 2010. Rail freight also declined further during April and now indicates a 13.4% year on year decline. Jordt says this continuous decline is partly due to the damage to the Durban Port.

Washaways and mudslides also affected sections of the main railway line between Cato Ridge and Durban for days, particularly in areas where communities encroached on the rail reserve.

“Ongoing issues regarding inadequate infrastructure and crime incidents on rail lines remain a problem and contributed to a 2.9% overall year-on-year decline in the rail freight sector.”

Jordt says it was tragic to see the devastation the floods caused, but it is truly impressive how the industry recovered, showing the transport industry’s commitment to the economic recovery, despite all the ongoing disruptions from a variety of external factors.

ALSO READ: Repairs on KZN’s Bayhead Road to conclude Tuesday amid fuel shortage concerns

Liquid fuels, air transport and road freight

The transport of liquid fuels using the Transnet Pipeline Lines (TPL) remained mostly unaffected during April, with no weather-related impact. TPL also accumulated stock at the Jameson Park Terminal to feed Gauteng and ensure supply security for the inland market. The overall pipeline transport grew by 6.3% year-on-year growth in April.

The gradual recovery of international supply chains and the normalisation of economic conditions post Covid-19, is enabling air transport to continue its steady growth.

Jordt says the air freight segment grew by 3.7% in April compared to a year ago, and the sector is expected to continue to grow as the international travel industry returns to more normal levels over the next year or two.

“Road freight remained the star performer in April and definitely picked up where rail freight fell short in recent years. Therefore, the road freight segment returned growth of 19.8% compared to a year ago, the strongest growth except the recovery from the Covid-19 hard lockdown levels.”

Changing consumer behaviour in favour of online shopping that resulted in the fast-growing courier and home delivery sector, remains an extensive contributor to the growth in the road freight sector.

ALSO READ: SA’s economy won’t grow before supply chain challenges are addressed

Transport and GDP

Jordt points out that it is a well-known fact that the transport sector’s performance and a country’s gross domestic product (GDP) are closely linked and the same is true for South Africa.

“While real GDP growth in the first quarter of 2022 was stronger than expected, with growth of 1.9% compared to the fourth quarter’s revised growth rate of 1.4%, the latest figures measured by the Index indicate that the economy has lost some momentum in the second quarter.”

He says this could be due to various factors, including the flooding, stage 4 load shedding during April and May, inflation and higher interest rates. This trend was mirrored by a notable drop in the ABSA PMI and passenger vehicle sales in April.

“Although the May 2022 ABSA PMI recovered from the very low levels of April 2022 (54.8 in May vs 50.7 in April), the index remains below the March 2022 level (60.0), indicating that the post-April recovery could be slower than initially expected,” Jordt says.

ALSO READ: The broken links in the global supply chain

Global supply chain problems

However, while transport and logistics are picking up in South Africa, importers and exporters still have to deal with global supply chain problems.

Supply chain logistics must still recover fully from the severe lockdowns at the start of the pandemic, but there are other consequences too, says Gary Swinson, head of global trade at DG Global Forwarding.

He says the closures resulted in congestion and long delays in shipping, as well as a shortage of empty containers for loading and moving goods elsewhere around the globe.

China had several port closures over the past year due to repeated Covid-19 outbreaks and lockdowns, while shipping has also been disrupted by the Ukraine-Russia war and even local harbours experienced interruptions this year from extreme flooding and damage to key infrastructure.

Swinson says a Royal Bank of Canada (RBC) study in May found that a fifth of the global container ship fleet is currently stuck in congestion at various major ports, while the local computer and network industry was warned of delays that will last into 2023 due to the shipping backlogs.

 “The implications for importers and exporters are enormous and the effect on a business can range from potentially crippling to throttling its growth prospects. Anyone involved in moving goods globally needs to pay attention to their supply chain management.”

 He says organisations need to consider stock availability because delays can cause stock running low or even running out, increased costs of insurance premiums, fuel and shipping, while there’s the additional holding cost of the delayed freight, all putting additional pressure on businesses. Organisations must also keep an eye on cash flow as the higher costs combined to longer lead times mean that capital is tied up for longer, adding to cash flow pressures.

Arno van Niekerk, director at DG Capital Funding Solutions, says companies must take action to manage its supply chain risks.

“Start with planning and stock management, manage your funding requirements, enlist the aid of freight experts and optimise your forex and hedge the risk.”

For more news your way

Download our app and read this and other great stories on the move. Available for Android and iOS.