Logistics Management On The South African Economy Essay


Logisticss has a major impact on the South African Economy. Logistics costs have been increasing from twelvemonth to twelvemonth and a batch of South Africa ‘s substructure has room for betterment. Logisticss cost entail cost of logistics activities which include procurance, stuffs managing, packaging, warehouse direction, stock list control, order processing, logistics communications, conveyance, contrary logistics, client service, demand prediction and works and site choice. South Africa competes globally in the free-market and this gives it more inaugural to better its logistics costs because we are a underdeveloped state viing against developed states. Logisticss and supply concatenation direction should add value through clip and topographic point public-service corporation lending to overall fight.

Time public-service corporation is the value added by goods being made available at the right clip. Place public-service corporation is the value added by traveling goods to where the demand is greatest. Non-value adding activities should be eliminated and value adding activities enhanced. Non-value adding activities include the conveyance and repositing, and value adding activities are service and quality betterments.

The production rhythm and order lead clip can be reduced by organizing the five logistics activities which include purchasing, merchandising, doing, traveling and hive awaying. South Africa ‘s imports and exports suffer due to our current substructure which one time once more hinders our planetary fight. This refers to the location of our major industrial hub which is Johannesburg. The Fifa World Cup is expected to be one of the greatest events in South Africa in 2010 and this has immense logistical impacts which will be both disputing to South African companies and positive to the states development in logistics.


Sentence rewordedThe value that logistics adds to the South African economic system should be greater than the costs and should lend to the overall fight and sustainability of our state. The manner to accomplish this sustainability is to efficaciously join forces the private and public sectors, better procedures and alteration constructions. High focal point must be placed on heightening on value adding activities and on extinguishing or cut downing non-value adding activities by making an consciousness on lessons learnt and avoid the return of hapless service bringing. This could include cut downing the motion of goods and the storing of goods and bettering and heightening quality reviews which add value.

Word changed

Sentence rewordedLogistics is a important portion of the supply concatenation. Focus is placed on ; cost decrease, efficient and dependable safe motion of goods from point of beginning to point of ingestion which adds value. Integration of concern activities is necessary to add value. The client perceives value as the tradeoff between quality and monetary value and different clients perceive value in different facets. Some clients perceive value as the cheapest merchandise with the highest measure while others see merchandises with higher monetary values as higher quality and hence higher value.

Sentence addedFrom an organizational point of position, logistics ensures that merchandises are delivered to the right topographic point, at right clip in the right measure in the coveted status. The challenge of logistics is to offer clip and topographic point public-service corporation at a competitory cost and guarantee that client value is added. The job with this is that topographic point public-service corporation is a serious job because of South Africa ‘s long conveyance corridors. The industrial hub is situated in Johannesburg, 580km ‘s off from the closest port in Durban by route and 688km ‘s via rail.

By going via route we incur tollgate costs that are invariably increasing and via rail the distance is 20 % longer as it deviates from route by go throughing through Volksrust, Newcastle and Ladysmith. These are jobs which contribute widely to increased logistics costs and diminish the value added by topographic point public-service corporation. Time public-service corporation is value added to goods by holding gross revenues ware and merchandises available to consumers at exactly the right clip when clients demand it. Logistics adds value by cut downing lead times and guaranting stock list degrees are low.

South Africa normally has issues with presenting merchandises on clip as our substructure and supply concatenation employees can do holds through damaged, closed roads or work stoppages. We besides make usage of route conveyance which can increase lead clip as congestion and indirect paths can be really clip devouring. Rail conveyance could well cut down conveyance costs every bit good as cut down the hazard of freight harm ; this is due to the increased safety of utilizing rail transit over route. We do non do sufficient usage of rail conveyance this because South Africa has inefficient and unequal rail substructure.

Consumers are going wealthier with increased, diverse demand. As a consequence, the South African economic system is sing increased productiveness and an increased demand for a assortment of goods. In order to run into this demand, logistics activities need to be efficient and effectual and add client value in each activity, map and with each supply concatenation spouse. This is why logistics as a value adding activity is of import to our economic system. Improved logistics generates greater value which by increasing client demand which leads to increased GDP and economic development.


Logisticss serves as a large competitory arm for companies all over SA. It affects overall company and economic costs as a 1 % salvaging in logistical costs constitutes a immense nest eggs with respect to overall economic and company costs. This is why it is so of import that South Africa strives to run into the high criterion of supply concatenation direction expected globally.

Our distance from the chief trading hub makes this an even more imperative aim because this disadvantage means we have to be perfect in every facet to counterbalance for this, and remain on the same degree as our planetary rivals. South Africa is really inconsistent in footings of logistics at a concern degree. Some companies are extremely competitory and successful while others struggle to run into the minimal degree of logistics demands and have inefficient supply concatenation direction.

South Africa ‘s political history has impaired our logistical development. After the 1994 elections and the democratization of South Africa, we re-entered the free market as a diminished state compared to our planetary rivals. There is still a seeable deficiency of trust between South African companies which prevents the effectual and efficient trade of information within and between supply ironss.

Incorrect statementSouth Africa presently has many logistical challenges. The first, and most of import, being our deficiency of skilled and educated logicians. This means that our ability to maintain up with the planetary gait of developments and betterments in logistics is impaired. As a consequence our supply ironss are non conducted expeditiously and efficaciously ensuing in direct and indirect unneeded costs. One of which is resource wastage which is an indirect cost- TAKE OUT. Logistic costs presently make up a high 18 % of the GDP in South Africa compared to the USA ‘s low 9.9 % . This highlights how far behind South Africa is competitively in footings of logistics.

Sentence reworded

Check Reference

Sentence added

Not right! ! ! South Africa presently gives penchant to route conveyance alternatively of rail because we believe route provides better service nevertheless there are many downsides. Road substructure care is low. Potholes harm vehicles and present an insecure danger to freight increasing a companies vehicle care costs. Road care is n’t a precedence in South Africa because of deficient budget allotment. “ The mean care costs and tyre costs form 28 % of the entire transit costs.

A company ‘s entire logistics costs can increase by every bit much as 8 % due to vehicle care and fix for a truck going on a route with a bad status evaluation. ” – Vic Ferreira ( Reef Tankers ) . Congestion is a consequence of the current inordinate route usage and farther encumbers the service degree. Rail might be a better option in footings of costs and safety, but unluckily South Africa has deficient rail substructure to supply the same degree of service as route provides.

Taking into history all these factors we can reason that South Africa does non hold a comprehensive national scheme for logistics and supply concatenation direction. The point of efficient and effectual supply concatenation direction is to incorporate and do possible cooperation between and within supply ironss and due to our current logistical state of affairs this is non wholly possible.

Effects ON 2010 FIFA WORLD CUP

After the planetary economic recession South Africa is demoing marks of a slow recovery. The Soccer World cup this twelvemonth is expected to lend to this recovery by supplying injections and besides lead to increased local concern chances. A immense concern for the successful running of the FIFA World Cup was holding an disposed logistics system. All companies logistics and supply concatenation direction needs to be run at the highest degree and have the ability to manage the extra capacity to guarantee this smooth running.

Delivery of increased merchandises such as nutrient supplies to the major association football locations and tourer attractive force points is the 1 of the first pressure factors. The increased capacity of tourers in South Africa means an increased demand for adjustment and conveyance via route and air. Limited adjustment capacity means that tourers are unable to shack in the metropolis where their chosen World Cup lucifer is taking topographic point. This means an increased sum of air and route conveyance to and from finishs. Many are concerned that our unequal conveyance substructure will take to many people losing kick-off times for their lucifers.

Sentence rewordedInitiatives have been launched to better airdromes in all the major Fifa metropoliss. The Airport Company South Africa announced that the ascents of all airdromes are 90 % complete as of 2 March 2010. The staying 10 % will be completed before the World Cup. The O.R. Tambo International airdrome has ever been the chief international airdrome, but Cape Town is the chief tourer finish in South Africa and so when South Africa won the command to host the Fifa World Cup it started with major betterments on the Cape Town International Airport. These betterments included 8000 parking bays, the cardinal terminal edifice and vehicle roads upgrade. This will all be completed by the terminal of March.

The World Cup has had positive effects on our logistics substructure. It has increased force per unit area to quickly better our logistics state of affairs. The Public Transport Infrastructure and System Grant has invested R11.7 billion in bettering public and route substructure, Bus Rapid Transit systems, airport-city links such as the Gautrain, rider safety and even inveigh ascents in readying for the inflow of tourers. This would n’t hold been possible in such a short infinite of clip were it non for the Fifa World Cup Tournament.

Sentence added

Word addedSouth Africa as a state is known for it ‘s copiousness of resources and minerals. This has resulted in a great demand for our resources and hence increasing sums of exports. Our resources include Gold and other cherished metals, diamonds, natural steel, ferro-alloying stuffs, Pt and aluminum. South Africa is besides a big importer of merchandises from the remainder of the universe, chiefly importing those merchandises that are cheaper to import than industry.

These include electrical merchandises, pharmaceutical merchandises, Agricultural merchandises and many more diverse merchandises and services. Exports and imports are increasing every twelvemonth, taking to the conveyance of these merchandises and doing the logistics involved more of import than of all time. High costs and unequal in-land and cross-border transit are some of the restraints confronting South Africa ‘s logistics industry.

How could route consequence the import and export abilities? ? ? ? – merely look into

Sentence ChangedThere are a figure of different manners of conveyance used in the logistics systems of exporting and importing air messenger, air cargo, sea cargo, majority and roll-on-roll-off are a few of the manners of conveyance used. South Africa is presently upgrading and bettering the criterion of its ports and rail substructure to do the flow of imported and exported merchandises more effectual and efficient.

Road remains our chief agencies of conveyance even though our route substructure is deteriorating and this enormously affects our exportation and importing abilities. Rail is cheaper and more sufficient, particularly with transporting merchandises in majority, and besides decreases congestion and better serves the environment, but because our rail system ca n’t get by with the sums and volume of goods transported, companies are turning to other agencies of conveyance.

The other restraint on South Africa ‘s import and export logistic systems is the high costs involved. Fuel has one of the biggest impacts on these costs every bit good as unskilled employees. We manufacture many of our merchandises to be exported in Johannesburg, and this increases the sum of fuel consumed as these merchandises must be transported to the seashore before they are exported. Exports and Imports need to be done in a timely mode, with the lowest lead clip possible and unskilled logistics employees prolong the lead clip.

South Africa is seen as the gateway to the remainder of Africa, doing it the hub to imports and exports into Africa. It has the potency of being the cardinal logistics hub of the Southern African Development Community part. However, to increase the effectivity of export and import logistics South Africa needs to better their dealingss with the neighbouring African states, for illustration Zimbabwe.

The Resurrection of Zimbabwe could take to a big addition in investing and capital influx to Zimbabwe via South Africa, Zimbabwe so moving as an indispensable portion of our supply concatenation. Therefore by holding good dealingss, improved port and rail substructure and improved accomplishments on South Africa ‘s logistics systems, we are better ready and able to manage exports and imports, with, via and into our state.


South Africa does non do usage of its possible to diminish logistics costs. We make usage of excessively much route conveyance because our rail substructure is non at the degree it should be. To better on entire logistics costs we need to better and develop our rail substructure which will ease congestion on roads and hence lessening chuckholes and harm to vehicles. By seting restraints on the times that trucks travel and merely leting them to go at dark we can besides cut down congestion. Trucks should besides merely be used for short distance conveyance and rail should be used for long distance transit.

To better on our rail substructure we should diminish the rail corridor between Johannesburg and Durban as this will diminish our overall travel clip by rail and increase the clip and topographic point public-service corporation and hence the value added. By easy developing the industrial countries at the coastline such as Durban, pressures on Johannesburg can be relieved and less conveyance between Johannesburg and Durban will be needed for importing and exporting.

Sentence addedTo better our Supply Chain Management and Logistic we need higher skilled and educated logicians and employees within the supply concatenation. Educated employees lead to lower order lead times as they work more efficient and efficaciously. We should try to forestall the ‘Brain Drain ‘ from South Africa by maintaining our skilled work force content and supplying them with wages and employee benefits in line with what is globally acceptable. Large logistics corporations are making consciousness on learner ship plans which mean skilled workers will try to better the cognition of current deficient public presentation some workers. The focal point should besides be on pulling skilled logicians from other states to assist better our supply concatenation direction and logistics.


Before the recession South Africa ‘s rate of economic enlargement was spurred by domestic ingestion, investing growing and international demand for trade goods. In 2007 the World Bank ranked South Africa 124th out of 150 states in footings of domestic logistics costs. In 2008 entire logistics costs were R339 billion, stand foring an addition of 6.9 % from 2007. Road substructure has deteriorated at an of all time increasing rate. The per centum of bad roads in the secondary route web has increased from 8 % in 1998 to 20 % in 2008.

This route web has many bringings routed on it. Transport costs by roads contribute to 55 % of entire logistics costs while rail contributes to 20 % . Increasing usage of roads due to being a developing state leads to higher route fix and care costs. At the minute our authorities is unsuccessfully apportioning plenty to run into these demands. This means that economic system are sing the negative effects of un-kept route substructure by harm to vehicles due to chuckholes and high, increasing tollbar rates as an effort by Government to do financess available for the care of roads. Therefore we can see that logistics costs have been increasing over the old ages and South Africa needs to command these costs to stay competitory.


International trade is a critical portion of the success of any economic system. Globally the transit of cargo has become highly efficient and effectual. It is possible to buy merchandises all over the universe and addition entree to international merchandises at the chink of a button. The ground for this rapid globalization and logistics demand is due to the sceptered consumer that has entree to merchandises around the universe with the usage of the cyberspace every bit good as universe category logistics organisations that guarantee goods are delivered anyplace at the right clip. South Africa has broken the international trade barriers and this is due to the rapid development of logistics systems and strength of the economic system.

South Africa has followed the general tendency of the international market, by integrating different manners of conveyance to guarantee the most effectual and efficient motion of goods. South Africa conducts international conveyance via air, rail, route, grapevine every bit good as sea transit. The most economical manner of international conveyance is sea. The bulk of international trade is conducted through sea transit. The ground for this is that big cargos of bulk goods can be safely transported. This requires harbours around the universe to be efficient and accept the capacity of immense cargos. South Africa in relation to planetary tendencies is up to day of the month and continuously bettering systems every bit good as seaports.

South Africa has noticed planetary tendencies in logistics and proactively moved focus towards planetary minutess and traveling goods around the universe. Supply ironss have now become planetary supply ironss and South Africa takes portion in assorted supply ironss and contributes to efficient logistics systems around the universe. This has a positive impact on the South African economic system due to the addition in international trade. In 2009 South Africa was rated 28th out of 155 states surveyed on the trade of logistics, capacity of states to expeditiously travel goods and connect makers and consumers with markets. This above statement is a planetary tendency and South African logistics has adapted to his tendency and ensured the benchmark of the success of the South African logistics.A

The transit globally of containers has increased in frequence and size. Containers are user friendly and ships are now able to transport 1000s of containers, this addition in motion of goods via sea conveyance has placed an addition in demand for larger ports and improved burden installations. Countries around the universe have recognised this demand for increased port capacity and have spent 1000000s on the development and betterments of ports around the universe. This development of deeper ports will ensue in improved efficiency and cost decreases. A big sum of international trade is done by sea ; South Africa is cognizant of planetary tendencies and is presently developing the seaport to better planetary fight.

South Africa is developing internationally ; the development of the latest seaport in Port Elizabeth is called Ngqura, and will concentrate on the motion of containers. Ngqura is going a internationally recognized transhipment hub in the Indian Ocean country. The ground for this is due to the port holding increased capacity and one of the lone seaport in South Africa that can suit the big ships, due to the deep H2O ports and first-class gauntry installations. Logisticss globally is developing and altering at a rapid rate, with a important addition in trade paths every bit good as the addition in per centum of GDP that logistics contributes to. Logisticss is concentrating more and more on the flow of information and incorporating activities with the chief focal point of the planetary supply concatenation.


Therefore we can reason that logistics does hold a major impact on the economic system. It contributes to a big part of the overall GDP and this means that nest eggs in logistical costs contribute to a big economy in GDP. South Africa is rated 124th of 150 states in footings of our logistics costs and this impairs our planetary fight. The Fifa World Cup is decidedly an event to take into consideration from a logistical position as it presents chances for logistical betterment and rating. It has increased the velocity at which our logistical development has taken topographic point as the inflow of tourers and the repute of South Africa has added force per unit area to supply efficient and effectual supply concatenation direction and logistics, and to turn out that South Africa deserved to host this World Wide event.

South Africa can decidedly better its logistics by bettering its conveyance substructure such as route and rail, presenting deep-water ports and presenting restraints on trucks, all which contributes to be decrease. Logistics has improved over the old ages and has focused more on the flow of information. Therefore logistics is straight related to the success of the economic system in many ways. And the effects of logistics must non be underestimated.