Could the growth in e-commerce and logistics drive sales for commercial vehicles and bikes?

Global e-commerce sales are expected to increase over the next few years with South Africa’s yearly growth rate of 8% between 2021 and 2025 expected to outperform the global average of 6%.

Aiming to capitalise on the growing e-commerce trend, City Logistics, the largest privately-owned logistics provider in South Africa, and private equity management company Clearwater Capital, Capital, have partnered to acquire 100% of franchised courier company, Fastway Couriers South Africa.

The acquisition has created one of the largest turnkey logistics providers to the fashion, retail and e-commerce sectors, says Ryan Gaines, City Logistics’ CEO.

“The combined businesses of City Logistics and Fastway offer one of the most affordable delivery options in South Africa for SMEs and corporates,” he comments.

“Logistics companies are increasing their workforces, technology, and fleets to keep up with increasing e-commerce demand,” says Keval Mehta, Clearwater Capital’s executive director.

OEMs (original equipment manufacturers) with a strong product offering could be likely beneficiaries of this market activity.

AutoTrader figures show a 65% increase in search activity for used LCVs (light commercial vehicles) when comparing January-July 2020 data to January-July 2022. Of those searches, the most enquired models are the Toyota Hilux, Ford Ranger, Nissan NP200, Isuzu KB and Volkswagen Amarock. Meanwhile, sales of new medium and heavy trucks increased by 33% and 18.3% respectively in July 2022, compared to the corresponding month last year, according to Naamsa, the Automotive Business Council.

In motorcycles, similar increases have been recorded. Searches for used motorcycles show an increase of over 69% when comparing January-July 2020 to January-July 2022.

The new motorcycle market grew by 26.7% in 2021 when compared to 2020, according to the Association of Motorcycle Importers and Distributors (AMID).

“Fastway’s unique regional franchise model provides an opportunity for micro-entrepreneurs to benefit from the growth opportunity in the e-commerce sector,” says Mehta.

The Fastway acquisition allows City Logistics to provide its existing and future customers a valuable small parcel solution. The two companies count Mr Price group, Home Choice and The Foschini Group among the list of shared customers.

“This transaction will further assist the growth opportunity that lies with global e-commerce retailers like Alibaba and Shein, where imports are brought to one central place for final distribution to end customers. This is a service that Fastway is likely to develop further in the future,” says Gaines.

The Fastway transaction, which includes Fastway Couriers’ National Master (Fastway South Africa), as well as Fastway (Johannesburg) and Fastpost, follows on City Logistics’ acquisition of Fastway (Cape Town) and Fastway (Durban) in 2021.

Fastway will continue to operate as normal, servicing its existing routes and using existing suppliers. Fastway will report to the board, which will include members of City Logistics and Clearwater Capital.

Reference

1. https://ecommercedb.com/en/markets/za/all

2. AutoTrader

Source: Nikki Chennells