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A bump in the road to recovery but Rail Freight remains a concern

After an excellent recovery by South Africa’s logistics sector as measured by the Ctrack Freight Transport index, the industry took a slight breather during the month of January. It seems the increase in Level 3 restrictions had a detrimental effect and the total Freight Transport sector showed a decline of 1% in January.

While the year-on-year numbers improved, the monthly numbers showed a significant 4,7% decline between January and December. This resulted in the quarterly figure adjusting from a 5,3% increase to only a 2,4% increase.

“The Ctrack Freight Transport index shows that after a near perfect recovery in the closing months of last year, all sectors were slow to get going in 2021,“

comments Hein Jordt, Managing Director of Ctrack SA.

High demand for International transport particularly Sea Freight

Good news is that the Freight Transport sector is likely to remain very busy this year. Uncharacteristically, Chinese manufacturing remained open despite their Luna New Year celebrations at the end of January, as supply disruptions has meant that factories are behind with their orders.

Competition for freight space is so fierce that companies are paying exorbitant premiums to get on planes and vessels as well as applying more flexible shipping methods to avoid delays.

Currently South Africa is facing a shortage of normal containers and Sea Freight is being loaded and off loaded in phases as the supply disruptions have caused havoc with scheduling of ships arriving and leaving harbours all over the world.

Freight transport across the globe is currently rather unpredictable and transporters need to plan to avoid getting caught out by an influx of goods arriving one month followed by a drought of goods the next.

Major shipping and freight companies around the world are increasing prices and changing ships to try to cope with the disruptions brought about by the pandemic and lockdown restrictions. Fortunately in Europe trucks have been allowed to operate almost as per normal, despite the lockdown restrictions, but there are some reports of delays.

In manufacturing sectors such as vehicle manufacturing a shortage of chips has resulted in mass delays of new cars rolling off the production line. The shortage of chips is attributed to a spike in the demand for consumer electronics caused by Covid-19.

High demand for International transport particularly Sea Freight

Good news is that the Freight Transport sector is likely to remain very busy this year. Uncharacteristically, Chinese manufacturing remained open despite their Luna New Year celebrations at the end of January, as supply disruptions has meant that factories are behind with their orders.

Competition for freight space is so fierce that companies are paying exorbitant premiums to get on planes and vessels as well as applying more flexible shipping methods to avoid delays.

Currently South Africa is facing a shortage of normal containers and Sea Freight is being loaded and off loaded in phases as the supply disruptions have caused havoc with scheduling of ships arriving and leaving harbours all over the world.

Freight transport across the globe is currently rather unpredictable and transporters need to plan to avoid getting caught out by an influx of goods arriving one month followed by a drought of goods the next.

Major shipping and freight companies around the world are increasing prices and changing ships to try to cope with the disruptions brought about by the pandemic and lockdown restrictions. Fortunately in Europe trucks have been allowed to operate almost as per normal, despite the lockdown restrictions, but there are some reports of delays.

In manufacturing sectors such as vehicle manufacturing a shortage of chips has resulted in mass delays of new cars rolling off the production line. The shortage of chips is attributed to a spike in the demand for consumer electronics caused by Covid-19.

Road Freight only declined slightly last year and has actually had two consecutive months of year-on-year growth.

It is rare that road and rail have such a big divergence in direction and this should be of concern to Rail Freight operators as rail is certainly losing tonnage to road transport.

Along with a slowdown in bulk exports it could be a once off situation but indications are that rail has also lost market share in general goods that are transported on land.

Overall rail income for the year to date has declined with an estimated R4 billion which equates to 9%. While Road Freight also declined during Level 5 and Level 4 in 2020, it has since recovered while rail has not.

A bump in the road to recovery but Rail Freight remains a concern

mm
Tristan Wiggill
Seasoned writer, journalist, photographer, and editor.
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