The South African freight and logistics industry encompasses a myriad of businesses of all shapes and sizes: from an entrepreneur on a bicycle delivering small items for a fee to a fleet of transport vehicles which travel the length and breadth of South Africa’s roads to multinational shipping and transport companies moving cargo loads across the world using sophisticated supply chain management technology. In a nutshell, the industry focuses on the logistics of getting the right goods to the right role-players in the supplier-manufacturer-wholesaler-retailer-consumer continuum at the right time by truck, train, ship, aircraft or pipeline.

ANALYSIS OF THE INDUSTRY

The University of Stellenbosch Department of Logistics, the oldest in the country, produces an annual Logistics Barometer to empower statutory regulators, infrastructure owners, policy makers, economic planners and industry players to come together and deal with the issues facing the industry. They define logistics as the “processes involved in transporting resources from their place of origin, supporting the processing of these resources, and delivering the finished products on the intended time at a designated place at acceptable cost for consumption or use. In view of the fact that logistics adds value through the most profitable application of available means, adequate logistics competency gives firms and practitioners a competitive advantage.” (Stellenbosch University Logistics Barometer 2015)

Barloworld Logistics, one of South Africa’s logistic giants and a member of the JSE-listed Barloworld Group, has grown into a significant supply chain solutions business, with a footprint in over 100 locations in southern Africa and the Middle East. The company sponsors another annual analysis of the industry, supplychainforesight. Like the other industry leaders, its service offering spans the depth and breadth of the industry, and includes warehousing and distribution, inventory solutions, supply chain consulting, supply chain management, freight forwarding, road transportation, transport management services, supply chain software planning and temperature controlled solutions.

“The Logistics Barometer is a valuable and complementary research piece to our supplychainforesight survey that offers a qualitative view of trends in the southern African logistics industry,” says Kate Stubbs, Executive: Business Development and Marketing at Barloworld Logistics. “Barloworld Logistics competes with both local and multinational services providers depending on the nature of the solution to the customer. We hold our own in the industry thanks to world class solutions that embody our customer-centric philosophy and operational excellence, allowing us to extract maximum value for customers, while maintaining our long-term competitive advantage.”

SKILLS DEVELOPMENT CRUCIAL TO THE INDUSTRY

To provide workable solutions to complex problems, role players in this complex industry need sophisticated skills to predict demand and supply and plan accordingly; optimise the available transport networks; provide for future infrastructure and finance demands, taking into account a multitude of variables, like toll charges and petrol price fluctuations; and develop constantly evolving technology to control costs and improve service.

“Barloworld Logistics focuses on people development, diversity and inclusion to ensure we have a broad range of skills, capabilities and mindset to address different client and market requirements,” says Stubbs.

At the other end of the spectrum to the massive supply chain management businesses lie niche logistics businesses focusing on a specific part of the industry. One such business is relative

newcomer Iyeza Express, a division of Iyeza Health. Started by social entrepreneur Sizwe Nzima in 2013, this bicycle delivery service delivers much-needed chronic medication from state hospitals to thousands of people in Khayelitsha, Cape Town. (In a perfect synergy of meanings, Iyeza means both ‘it is coming’ and also ‘medicine’.) The idea for the business came to Sizwe while waiting in the queue at a state hospital to fetch his grandparents’ chronic medication. Initially the sole rider, he now employs local youth. “The vital skills my employees need are the ability to ride a bicycle and an intimate knowledge of how to get around the township,” says Nzima. “This sets us apart from other logistics and courier businesses that don’t know the lay of the land and would find it very hard to navigate the area.”

Iyeza Health has recently expanded its product offering with the introduction of an HIV self-testing device. With the stated objective of “linking our health logistics services (Iyeza Express) with doctors, clinics and hospitals, as well as patients, to offer accessible alternatives to the current status quo in the pharmacy distribution and supply chain”, this is one business to watch.

DISRUPTION: NEW KID ON THE BLOCK

“Individual businesses and supply chains must manage their transport costs better by better route planning, full loads and partnerships with other logistics companies.” (Badenhorst-Weiss, J.A. & Waugh, B.J., 2015, ‘A logistics sector’s perspective of factors and risks within the business environment that influence supply chains’ effectiveness: An explorative mixed method study’, Journal of Transport and Supply Chain Management)

This philosophy of partnerships lies at the heart of a new business that looks set to be a game changer in the industry. In 2016, Naude Rademan, MD of logistics company CCS Logistics, and a handful of colleagues launched Linebooker, a simple online (and mobile-friendly) bidding platform. Linebooker connects transport customers and trucking companies to offer transparent pricing and end-to-end delivery facilitation services to the benefit of both transport companies and customers needing to have goods transported. “The company is seeing exponential growth in the number of customers and transporters using the online platform,” says Rademan. “By mid-2017, it is expected that Linebooker will be facilitating more than 2000 loads per month, without owning a single truck.”

A brilliant business concept if you consider the costs of running a fleet. “Many new entrants do not make it in this industry as they under-estimate the high load factors (utilisation) you need to make a profit. If you only secure freight in one direction you are obviously much more expensive,” says Prof Stephan Krygsman, subject head for Transport Economics in Stellenbosch University’s Logistics Department.

Faced with ongoing disruption that is largely being fuelled by technology, almost every industry is being forced to rethink traditional strategies and operational approaches. “As a leader in developing smart supply chains, we at Barloworld Logistics constantly keep our finger on the pulse, analysing trends and creating ways in which new methods and viable disruptive technologies can be adopted,” says Stubbs. “Without being open to internal change, we cannot survive rapid external change. In today’s world, we are either the disruptors or the disrupted.”

Sidebar 1

The disruptor: Linebooker

For transport customers, benefits include:
• A set fee (R150 to R450) per transaction based on the value of a load • Vetted transporters
• Comprehensive delivery facilitation service.
• Saving time – quotes come in within two hours

Transporters get:
• a single debtor (with no broker mark-up)
• payment within 15 days
• access to more potential customers
• the opportunity to improve ‘lane balancing’ (i.e. deliveries loaded in two directions)

Sidebar 2
Technological advances that are set to shake up the industry

• Route optimisation in real time;
• ‘Control-on-the-go’ as mobile devices are used to increase enterprise visibility;
• Faster reaction times to supply chain challenges (for example, natural disasters);
• Product tracking data to understand customer purchasing behaviour and support requirements; • Drone deliveries;
• Increased online shopping;
• Automated driving;
• Cleaner fuels;
• Improved truck safety;
• 3D printing.