The South African transport and logistics industry:
a spoke in the wheels
henry carelse and shaun scott
DIRECTORS: WORLDWIDE INTEGRATED LOGISTICS (PTY) LTD
Most industries in South Africa are faced with globalisation and transformation challenges. The South African transport and logistics industry is, however, faced with a number of its own peculiarities. This diverse industry comprises tens of thousands of individual truck- and bakkie-owners, as well as some of South Africa’s largest conglomerates including Transnet, Bidvest, Imperial and Grindrod. These service providers all experience reliability and cost-efficiency challenges, and many are faced with poor assets that struggle across inadequate road, rail and port infrastructure. Unless something is done to alleviate these problems, the sector could soon find itself in a crisis.
elentless service improvement and investment programmes in the transport and logistics industry will eventually have an impact on reliability and cost issues, but there are a number
of deep-seated challenges that face these players: The industry is rapidly consolidating. Most of them are struggling to be relevant in the global markets – there is no SAB Miller in this space. Empowerment deals have advanced, but their sustainability within a consolidating world is a challenge. Supply chains are demanding increased levels of integration, forcing often reluctant changes to business models. Transnet – and particularly Spoornet – are in a downward spiral, impacting everyone that uses rails and sea ports. Technology is changing rapidly, requiring players to keep pace. Supply chain skills are in demand, scarce and mobile.
INDUSTRY CONSOLIDATION. In South Africa, the industry went through a
convergence vol 6 no 4
consolidation phase in the 1980s, ’90s and early part of the 21st century. This process saw the emergence of mega and large conglomerates, including Bidvest, Imperial, Unitrans, Supergroup, Grindrod, Crossroads, Fuel Group, Value Logistics and Laser Logistics. Whilst consolidation has slowed amongst South Africa majors, it has maintained its pace internationally. Until recently, South African players have been relatively shielded from this unyielding process. However, in 2004 and 2005, they experienced an uncomfortable shift. Unitrans, until 2004, built strong ties with UPS, the $37bn US-based parcel courier giant. Unitrans managed the growing UPS Parcel business and also had a joint stake in the UPS Supply Chain Services venture focused on technology and integration solutions. UPS pulled out of both deals in 2004 and set up a separate entity. The Unitrans-UPS relationship remains cordial, but the split hurt Unitrans. It quickly established a relationship with Aramex in an attempt to fill the UPS supply chain gap and has continued to reposition the express and supply chain parts of the business. Unitrans is not alone. Bidvest has had deals with Fedex and Panalpina; and local Grindrod Limited has had deals with P&O Logistics and also Röhlig. Exel is a well-regarded supply chain services company with operations across the globe. In 2001 it acquired Eagle (South Africa) and established its first presence locally. This, however, posed little competitive threat to local players. With the acquisition of Tibbet & Britten in 2004, global consolidation started to hit home. Tibbet & Britten was a successful player in the local consumer goods industry and counted Unilever and Pfizer among its customers. Since the acquisition, Exel is now a major player in the local market and has started to make an impact, winning large clients and deals. And it’s not over. Exel is presently being targeted by Deutsche Post, the $55bn German giant which has been on an acquisition spree since 1999. The Deutsche Post brand most of us are familiar with is DHL. company primarily based in the UK. It seems to have a slim chance of providing Bidvest with a base to play in the...