Gauteng Business News

Send  Share  RSS  Twitter  19 Aug 2011

FREIGHT: The Freight Industry in South Africa Faces New Challenges


Recent Gauteng Business News

The freight industry in South Africa is facing a challenge that few would have expected. Uncertainty in the global recovery, recent fluctuations in the oil price and unusual weather patterns have had an adverse effect in the international freight industry. The Japanese Tsunami and the ash cloud over Europe have also had an adverse affect on the freight sector across the globe.

Locally, volatile fuel prices and strike action threatening fuel availability have affected freight forwarding pricing and guarantees of product delivery. Coface South Africa recorded a slowdown in the freight market as a result of organisations consolidating deliveries to save costs.

The Effect of Tolling on the Freight Industry in South Africa

In addition to these market pressures, the impending tolling of Gauteng highways is expected to have an adverse effect on the road transport industry, but could provide opportunities for rail freight. The greatest hindrance to companies using the rail system currently is the inadequate infrastructure as well as the suitability of rail transport for specific products transported.

While the date of the toll implementation and costs have not been finalised, Coface South Africa expects the freight industry to react negatively to these increased operational expenditures.

Coface does not foresee freight forwarding companies absorbing road toll costs, but rather increasing their freight forwarding charges. This is expected to have a knock-on effect for suppliers who will either have to absorb the additional cost of delivery or pass it on to consumers.

A Change of Strategy for the Freight Industry in South Africa?

Change in company strategies and possible acquisitions and mergers especially where larger freight forwarders market may be seen as profitability becomes a challenge for smaller companies. Customer service will continue to be a focus area with increased competition. Customer is king and with many additional expenses seemingly filtering in, it could end up being the customer who ends up paying for it. This leaves a rocky road ahead for the freight industry in South Africa.

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