Market Trends of south africa freight and logistics Industry
The rise in South African e-commerce fuels surge in quality warehousing demand
- The South African transportation and storage sector showed signs of recovery in 2021, with over 6% YoY growth in its contribution to GDP, driven by factors like the AFCFTA (African Continental Free Trade Agreement), increased demand in the cold chain market, the rise of e-commerce, and expanded transportation and logistics services. Furthermore, in the fourth quarter of 2022, the industry experienced a modest 0.7% growth, contributing 0.1% to the overall economic performance. This growth was particularly noticeable in land transport, air transport, and communication services.
- The demand for quality warehousing in Africa skyrocketed due to the rapid proliferation and growth of e-commerce platforms across the continent. This increase in online retail sales is expected to continue, with the South African e-commerce market expected to grow with a CAGR of 11.89% during 2023-2027. The country's supply is expected to increase as developers such as Africa Logistics Properties and Improvon plan to deliver speculative space to the market in the coming years.
- In South Africa, road transport dominates freight transportation. The government focuses on the National Development Plan (NDP), which aims to achieve a 30% investment-to-GDP ratio. Meeting the infrastructure needs outlined in the NDP is projected to cost over ZAR 6 trillion (USD 0.35 trillion) from 2016 to 2040, with energy and transportation accounting for 72% of this expenditure. The government has introduced the National Infrastructure Plan 2050 to address these challenges, prioritizing key areas such as energy, freight transport, water, and digital infrastructure.
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Average Brent Crude oil price increased from USD 79.75 to USD 84.78 in September 2023, due to tightening supply resulting from production cuts by Saudi Arabia
- South Africa's fuel prices are adjusted monthly, updated by international and local factors. International factors include South Africa importing crude oil and finished products at a price set at the international level, including importation costs. The average value for South Africa from May to August was ZAR 22.39 (USD 1.31), with a minimum of ZAR 22.10 (USD 1.30) in July 2023 and a maximum of ZAR 22.98 in May 2023. The average Brent crude oil price increased from USD 79.75 to USD 84.78 in September because of tightening supply resulting from production cuts by Saudi Arabia. Based on current local and international factors, the fuel prices in September 2023 for petrol (both 93 and 95 Octane) increased by 171 cents per liter (USD 1.71), while those of diesel increased by 284 cents (USD 2.84) per liter.
- South Africa ranked 65th out of 157 countries regarding the most expensive fuel prices per liter. In 2022, the global average price of gasoline was USD 1.44 per liter. In 2022, the petrol price per liter in South Africa was ZAR 23.29 (USD 1.37). South African petrol prices are higher than those of other African countries, except for Zimbabwe. Factors, such as currency exchange rates, contribute to the overall fuel price, while several levies, taxes, and margins are also added to the pump price.
- Fuel prices in South Africa rose by 278% from 2002 to 2022. Petrol 95 has grown by 368% since 2008, while diesel 50 ppm has grown by 51%. The wholesale price of 500 ppm diesel rose to ZAR 22.33 (USD 1.31) at the coast and ZAR 23.05 (USD 1.35) inland from September 2023, with 50 ppm increasing to ZAR 22.58 (USD 1.32) and ZAR 23.29 (USD 1.37), respectively.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- South Africa faced a population decline of 1.19% in 2022 due to HIV/AIDS and the white population migration
- The oil & gas and manufacturing industry driving the South African economy, supported by rising e-commerce sales since 2020
- The number of e-commerce users is expected to reach 37 million by 2027, from 27 million in 2022
- South Africa aims for manufacturing exports to account for 40% of total manufacturing output by 2030
- Rising fuel costs and a shortage of skilled truck drivers are increasing the overall truck operational costs
- South Africa rises to 19th place due to focusing on customs and infrastructure improvements
- Green hydrogen investment worth USD 17.65 billion is expected to boost future pipeline freight volumes
- South African ports to focus on hinterland port connectivity to increase connectivity and port efficiency
- Fuel prices affected by global freight rates leading to rising freight rates for all modes of transportation in the country
- South Africa accelerates infrastructure development with allocation USD 35.30 million focusing on strategic transport solutions
- South Africa aims for a more than 1 million annual automobile production under the South African Automotive Master Plan
- National price rises of major South African exports and fuel and electricity due to the Russia-Ukraine War were major drivers of PPI and CPI increase
- The manufacturing sector in South Africa contributed around 13% to the national GDP and grew by 9.85% YoY in 2022
- Supply of affordable cars leads to record vehicle imports by 24% in 2022 in South Africa
- Growing adoption of electric vehicles in South Africa is leading to rising transition in operational fleet
- ISUZU's medium commercial vehicle sales has witnessed highest YoY growth of 10.12% in 2022
- Surged coal exports due to the Russo-Ukrainian war coupled with declined freight rates and container capacity expansion projects are boosting growth
- Transnet National Ports Authority aims to turn Port of Durban into a world-class hub for container shipping
- Road freight is the most preferred mode of transport in the country with a rising focus on developing other transportation modes
