Before the current economic crisis blind-sided most of us in 2008, South Africa enjoyed relatively steady growth in GDP and consumer demand. Not even the rand's losses against the dollar, or the all-time high price of crude oil and fuel could curb our enthusiasm.
Now the recession has hit home and consumption is at a low-point. With the rand continuing to lose value, imports have fallen. To stimulate demand the SA Reserve Bank finally moved to lower interest rates a second time in March.
Clifford Blackburn, CEO of Transport Shinaji International* (TSI), says the rand-dollar depreciation is not that big an issue. “It has become standard for importers, freight and shipping companies to buy dollars at R10.” He adds that TSI has noticed a pick-up in imports throughout March as sentiment dies down and people start buying again.
As concerns exports, the weaker rand has not helped since export markets are faring badly too. But Blackburn says slowing international demand is off-set somewhat by continuing strong demand in China. (China is a major trade partner, being SA's fifth-biggest export market and second-biggest source of imports.)
As can further be seen from the graph, South Africa's trade with most other major partners has also continued positively until March. “Whatever the analysts are saying and economic indicators show, fact is the shipping lines are running short of containers at present,” Blackburn continues. “In fact, to meet export demand, forward planning is essential.”
Where China and natural market resilience haven't helped, the shipping, freight-forwarding and other logistics industries have all taken a hit to stay in business.
Blackburn says importers and exporters are benefiting from discounted shipping rates as the industry looks to boost business. “You can now book a container to China for as little as US$375, whereas $500 was a low rate before.”
Closer to home, Blackburn says rail and road transporters are among the hardest hit industries, as they have already been running on very conservative rates and have no reserves to carry them during this time. “You see parked trucks, fewer rail wagons between port and inland terminals, breakeven rates being offered, service offering a wider range of services..."
Blackburn says the best thing to do at the current time of need is to get rid of unnecessary baggage in the logistics chain. “It is important for all concerned to focus on their core business. Transporters must be transporters and not get into other parts of the chain. Importers must not be distributors or transporters.”
What he proposes is for importing-distributing retailers, exporting cooperatives, and even logistics providers like shipping companies, to leave the end-to-end management of logistics to specialists like TSI. The company has developed a software system that ties into multiple logistics service provider systems, for complete transparency of the processes, costs, delays and provider practices along the logistics chain.
“TSI manages the process end-to-end so our customers don't have to, providing deep, detailed visibility into the whereabouts and movement of their consignment and the cost thereof. This ensures that they have clear, defined costs, guaranteed service levels and defined relationships, for the best deal at every step of the logistics chain.”
* Of Japanese origin, meaning and pronounced as ‘synergy'
