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Despite the rate of growth of the South African materials handling and logistics industry being slower than comparable sectors in its Brics trade bloc partner countries Brazil, Russia, India and China for the past two years, audit, tax and advisory services firm KPMG expects positive growth this year. KPMG supply chain and procurement practices head and regional director Dr Dinesh Kumar believes that the increasing maturity and growth in the logistics sector will impact positively on logistics costs as a percentage of the gross domestic product (GDP) of South Africa. Logistics costs, as a percentage cost of the GDP, is currently estimated at between 11% and 11.5%.
“Moreover, regional and African logistics integration, potential consolidations among logistics players and the refinement of sector policies would improve logistics costs, as it would result in reduced spending on logistics,” Kumar suggests, adding that this will lead to improved efficiencies within the sector. This expected growth is in contrast to Kumar’s sentiments in 2014, when he highlighted that South Africa faced challenges of lower maturity in terms of materials handling, supply chain and logistics, especially in the sectors of consumer goods, transport and healthcare.
According to the ‘Logistics Performance Index’ report by the World Bank, South Africa rates second-best among the Brics nations, behind China. South Africa also ranked twenty-third among 155 nations in the index in 2012; however, the country slipped to twenty-fourth place on the index in 2014. This is a sign of South Africa’s recent regressive performance, Kumar laments. “While South Africa has improved in aspects such as international shipment and quality, it has lapsed in customs, infrastructure, tracking and tracing,” he says, explaining that customs is regarded as a trade barrier and compliance function, rather than a trade facilitator and efficiency function. Despite the materials handling and logistics infrastructure performing well in terms of services, the physical infrastructure is often not aligned to these services, Kumar adds.