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SA logistics sector ends 2022 on the back foot

Home Transport & Logistics Commercial & Fleet SA logistics sector ends 2022 on the back foot

THE Ctrack Transport and Freight Index (Ctrack TFI) declined by 3.5% on a monthly basis in December, following monthly declines of 1.9% and 2.3% in November and October, respectively. On an annual basis, the Ctrack TFI ended 2022 only 2.9% higher than a year earlier.

“The South African logistics sector was showing great promise and on track for a record year, but unfortunately, a continuous barrage of unforeseen external factors stopped that from happening,” says chief executive officer of Ctrack Africa, Hein Jordt.

The detrimental impact of the Transnet strike on the logistics sector is evident. The sea freight, rail freight and pipeline sub-sectors of the index were hardest hit with double-digit declines, while air freight turned out to be a beneficiary of the other sub-sectors’ demise. Overall, the index declined by 7.5% during the fourth quarter, the worst quarterly decline since June 2020, when the economy was still in the midst of the Covid-19 pandemic.

Looking at 2022, the worst performing sub-sector of the logistics sector was rail freight, which declined by a notable 22.4% year on year. While the impact of the Transnet strike was a dominant factor in quarter four, the further implosion of rail freight during 2022 has been a long time coming. Companies in many sectors of the economy have recently been reporting that inadequate rail capacity and lack of service delivery have been hampering factors in production, trade and growth.

According to StatsSA’s Land Transport Survey, the payload for rail freight transportation has reached its lowest level since 2008, when data was first reported, and now accounts for only 11.2% of total freight according to the latest data point recorded in October 2022. This ratio reached a high of 29.5% in January 2015. Based on an annual analysis, payload for rail freight transportation has been declining for five consecutive years.

The obvious beneficiary of this dismal reality has been the road freight sub-sector, which, on average, accounts for approximately 84% of total freight transportation in the country.

The number of heavy trucks on both the N3 and N4 toll routes increased compared to a year ago, while the road freight payload for the country also showed continuous growth throughout the year. The road freight component of the Ctrack TFI increased by 16.2% year on year in December, registering its 21st straight month of double-digit annual growth.

The sea freight sub-sector of the index declined by 13.3% during December compared to a year ago and declined on a monthly (-4.0%) and quarterly basis (-18.2%), reflecting the negative impact of the Transnet strike on ports’ activities.

The air freight sub-sector turned out to be one of 2022’s star performers, a combination of ongoing post-Covid recovery and, in the last quarter, a beneficiary of the logistical troubles created by the Transnet strike.

Ctrack sources data internally and from economistscoza, Transnet National Ports Authority, Statistics SA, N3 and N4 toll concessions, the Airports Company SA, Air Cargo Operators’ Committee and the International Air Transport Association.

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