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Johannesburg - There is a massive opportunity in South Africa for logistical and transport companies dealing with fast moving consumer goods (FMCG), according to Nicholas de Canha, CEO of Imperial Fleet Management.
“The transportation of fast moving consumer goods has experienced a significant growth of late in South Africa and Africa."
In South Africa, for instance, imports of containers into Durban ports increased by 5% in 2013. Most of the imports into Gauteng are consumer goods.
"While a fair amount of investment is being made by various stakeholders to upgrade the country’s rail networks to be sufficient to meet future demand, currently the transportation of goods and services is still largely reliant on road transport and this bodes a massive opportunity for FMCG logistical and transport companies,” said De Canha.
“However, additional imposed costs like increases in fuel prices and e-tolls can weigh heavily on any company running its own fleet of vehicles."
A company running a fleet of around 30 trucks will see their operational costs increase by about R30 000 a month due to e-tolls alone and De Canha expects many more logistics and transport companies will look to optimise their fleet operations.
Current challenge
The biggest current challenge for South Africa is the urgent need to upgrade the ageing rail infrastructure and to maintain the road infrastructure, according to Richard Matchett, divisional director at WSP Civil and Structural Engineers Africa.
This is despite South Africa having the most extensive road and rail network in Africa.
Road and rail networks are the backbone of any economy, however, they are also one of the most important assets in terms of sheer monetary value.
“If you can’t move goods, services and people around, your economy stagnates. Having a long-term view when preparing budgets for new infrastructure or for upgrading existing transport networks is critically important," said Matchett.
"That said, once this infrastructure is in place, it’s important to ensure it is well maintained. In fact, it’s cheaper to maintain infrastructure than to build new replacements. This is something that government must address effectively so as to better protect these assets in future.”
South Africa is in a process of revitalising its transport networks to try and set itself up as a transport hub for Southern Africa.
Laying new foundations
“To move forward, we need to focus on the positive developments and acknowledge that there has been significant traction and change in recent years," said De Buys Scott, head of infrastructure advisory and global infrastructure major projects at KPMG.
He regards the National Development Plan (NDP) as an example of a great catalyst for changing mindsets and driving investment into more robust and enabling infrastructure for the country.
"We have already seen significant traction in a number of strategic infrastructure projects (SIPs), including in our transport networks,” he said.
Some notable developments in rail he pointed out include projects by Transnet that will upgrade South Africa’s ports, as well as the parastatal’s passenger fleet programme, the Passenger Rail Agency of South Africa’s programme to expand and modernise its rail services in South Africa and the Gautrain.
“In addition to these programmes, we have also seen investments in upgrading the country’s national and regional road networks to create a more geographically integrated economy,” added Scott.
- Fin24
