Supply Chain Council of European Union |

Transport sector contending with the ripple effect

The October 2019 Ctrack Transport and Freight Index (Ctrack TFI) indicates a slower trend in transport volumes during September 2019. It also reveals that the slowing world economy is impacting South Africa’s international transport volumes, as well as local rail and pipeline volumes.

That being said, road freight volumes grew 2.5% while rail freight volumes edged up 0.2% between July and September 2019 compared with the same three-month period in 2018. Considering both a slower domestic economy and a far weaker international trade environment, land freight is still in a relatively stable position.

World trade volumes are under pressure. The CPB Netherlands Bureau for Economic Policy Analysis indicates that volumes declined 1.5% between July and September 2019 compared with the same period a year ago. On this basis, the decline in world trade is the steepest since November 2009. This is shown in the chart below.

Source: Ctrack and

In terms of South Africa’s logistics volumes, the Ctrack TFI shows a decline of 0.7% for the three months to September 2019 compared with the same period a year ago.

It also reflects a far weaker South African economy than was the case between April and June, when all indications were that growth was back in full swing.

This downturn, while not unexpected, is not good news for the South African economy and its ability to create work and income for its citizens. Weak business confidence levels need to be addressed as soon as possible, since capital investment only takes place when businesses are confident and certain about the future.

Source: Ctrack and

Transport operators will have to monitor their costs and performance closely. Risks must be contained as much as possible too, while opportunities remain hard to come by.

Road transport on the up

Road freight is a highly competitive business, and transport prices have barely increased in the last year. But some market share gains have been realised through price increases in both the rail and pipeline sectors.

Fuel products that are usually piped inland then distributed for Gauteng users and to other provinces are now being transported by road to places like Harrismith and Mbombela.

Furthermore, coal is being transported to local power stations by road instead of rail and conveyor belts. Other products that used to travel by rail are sometimes now also being loaded onto trucks.

Sea and air reflecting global headlines

Sea freight and air freight volumes continue to feel the effects of the US-Sino trade war and Brexit. Container shipping prices are lower in many markets, while about 3.5% of container capacity is not being used, up from 2% or so a year ago, according to Drewry maritime research consultancy.

Air traffic volumes between Africa and the rest of the world are growing at about 8%, albeit from a very low base. South Africa’s domestic air freight volumes are however in decline and not growing other than to certain African and Middle Eastern destinations. Both air and sea freight volumes have been relatively weak performers for the best part of two years now.

Transport sub-sectors percentage change in the past three months compared with the same three months in 2018

Source: Ctrack and

One cannot fail to notice that inventory levels are lower now as the uncertainty means cost containment from many a firm. Many retailers are storing fewer goods to save on both stock costs and floor space.

In manufacturing, the same savings are taking place as factory owners are being squeezed by slow domestic demand and export volume uncertainty. The decline of nearly 10% between July and September compared with the same three months a year ago is worrisome.

In short, the Ctrack Transport and Freight Index for October shows that in an uncertain world, the transport sector can’t escape feeling the pinch.

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