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Follow on Google News | New Market Report Now Available: South Africa Freight Transport Report Q4 2010Recently published research from Business Monitor International, "South Africa Freight Transport Report Q4 2010", is now available at Fast Market Research
The most expensive element of logistics is transport, accounting for about half the cost. Inventory carrying costs are 19%; management, administration and profit 17%; storage and ports 14%. Road transport is the most volatile cost because of its vulnerability to fluctuating fuel costs. The region's biggest challenge is the ailing state of rail infrastructure. Road traffic has consistently risen but rail freight volumes have fallen. The South African public sector does not have the funds it needs to invest in the long-term development of the country's freight transport infrastructure. Moves are under way to make them more efficient, less corrupt and give them better management. The South African National Roads Agency has raised funds for road construction by issuing government backed bonds. Transnet has failed to invest in rail, although its capital investment plans suggest it would invest if it had the funding. In 2008, only a third of freight was transported by rail. There are signs of private investment in rail transport. Transnet Freight Rail announced plans to open up all 7,300km of its branch lines in June 2010, by offering private concessions, which would operate the lines over a fixed long-term period. The move is geared towards attracting investment to the often underinvested in and frequently under-used branch line sector and freeing up government investment for other things. The China Railway Group at the end of August began initial talks about building South Africa's first high-speed rail line, partly financed by Chinese investment. One general motive behind such moves is that China would help to ensure that it received the coal and ore it demands. Resgen is considering a public-private rail partnership, to transport the coal from its proposed mine. Shipping company Grindrod is considering paying for rail carriages to protect its investment at Maputo's port. Bulk mining accounts for most rail freight movements. Escom, the power utility says it intends to move all the coal it now transports by road onto rail within eight years. The roads used in the mining area are wearing out. Bad road conditions push logistics costs 10% higher, because of higher truck maintenance and repair costs. The operating environment was broadly favourable to the local freight transport sector in mid-2010. The country remained Sub-Saharan Africa's strongest and most stable democracy and its role hosting the World Cup football championship brought economic benefits and raising its profile in the eyes of international investors. An economic recovery is under way and BMI has revised its 2010 GDP growth forecast upwards to 3% from 2.6%, previously. Over the forecast period annual growth is expected to average 4.1%. Total trade is expected to grow by 8% in 2010 with exports growing 5% in 2010, in contrast to a -19.4% contraction in 2010. Imports are expected to grow 10.4% after contracting -17.4%. Over the next five years BMI expects overall trade to grow by an annual average of 7.2%. According to data released by Statistics South Africa income from freight transportation for May 2010 increased by 5% compared with May 2009. For the three months ended May 2010, income from freight increased by 9.7% compared with the three months ended May 2009. This increase is mainly due to a 30.6% increase in primary mining and quarrying products, 20.4% increase in basic metal and fabricated metal products and a 26.3% jump in non-metallic products. The volume of goods transported for May 2010 increased by 2.6% compared with May 2009. Commodity shipping costs, which have dropped considerably in May, are set to fall even further because of an expanding fleet of dry-bulk vessels and slowing Chinese demand for iron ore. The Baltic dry index is 32% lower compared to the same time last year because of the expansion and a two-month decline in China's iron ore imports. The reduced cost of freight in turn sparked renewed interest from Chinese buyers for coal if they can get a low rate per tonne. Rail freight is expected to grow 5% in 2010 offsetting some of the -7% contraction it experienced in 2009. South Africa's main ports are also expected to have positive growth in 2010, although they will not regain the throughput experienced before the crisis until near the end of the forecast period. Perhaps the main risk to South Africa freight forecasts is political with the possibility of disagreements within the ruling ANC or allegations of corruption in the administration could have a negative impact on investor confidence. The parastatals are trying to change themselves and become more efficient and less corrupt and there is the risk of conflict in these companies and between them causing more harm than good. There is also some chance of more labour unrest by port or rail workers. For more information or to purchase this report, go to: - http://www.fastmr.com/ About Business Monitor International Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at http://www.fastmr.com/ About Fast Market Research Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156. # # # Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available. End
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