The Big, The Small And The Disruptive

The South African freight and logistics industry encompasses a myriad of businesses of all shapes and sizes. From an entrepreneur on a bicycle delivering small items for a fee, to a fleet of transport vehicles that travel the length and breadth of South Africa’s roads, to multinational shipping and transport companies moving cargo loads across the world using sophisticated supply chain management technology.

In a nutshell, the industry focuses on the logistics of getting the right goods to the right role players in the supplier to manufacturer to retailer and consumer continuum – at the right time by truck, train, ship, aircraft, pipeline, and sometimes by bicycle or by foot.

The importance of logistics and supply chain management in realising business success has become increasingly evident during the past two decades – expedited primarily by globalisation and internet-led innovations and technology. Because it relates to practically all business activities, more and more companies are acknowledging supply management as a key element of their business strategies. As such, they’re looking for ways to optimise resources, reduce risks, advance efficiency, improve customer satisfaction, and increase the flow of information – and they’re looking for service providers who can deliver on these needs and provide new and innovative solutions on an ongoing basis.

Moreover, as companies are expanding into new markets, they need freight and logistics suppliers that can support and grow with them.

With the role of supply chains and logistics emerging as an increasingly important means of sustaining and advancing business models and achieving competitive advantage, the demand for effective, continued understanding and analysis of the sector has grown accordingly.

The big picture

The Department of Logistics, University of Stellenbosch, produces an annual Logistics Barometer that it says is designed to empower statutory regulators, infrastructure owners, policy makers, economic planners and industry players to come together and deal with the issues facing the industry.

The Barometer defines logistics as the “processes involved in transporting resources from their place of origin, supporting the processing of these resources and delivering the finished products on the intended time, at a designated place at acceptable cost for consumption or use”. In view of the fact that logistics adds value through the most profitable application of available means, adequate logistics competency gives firms and practitioners a competitive advantage.

Among South Africa’s logistic giants and a listed member of the Johannesburg Stock Exchange (JSE), Barloworld Logistics [part of the Barloworld Group] has grown into a significant supply chain solutions business with a footprint in more than 100 locations in southern Africa and the Middle East. Like the other industry leaders, its service offering spans the full extent of the industry; and includes warehousing and distribution, inventory solutions, supply chain consulting, supply chain management, freight forwarding, road transportation, transport management services, supply chain software planning, and temperature controlled solutions.

Barloworld Logistics sponsors another annual analysis of the industry called supplychainforesight, which seeks to identify the key issues, upcoming trends and future opportunities across global economies and local businesses. The study, says Kate Stubbs, who is the executive for business development and marketing at Barloworld Logistics, works alongside the Logistics Barometer to provide valuable insights into the sector.

“The Logistics Barometer is a valuable and complementary research piece to our supplychainforesight survey, which offers a qualitative view of trends in the southern African logistics industry,” she says. “Barloworld Logistics competes with both local and multinational services providers depending on the nature of the solution to the customer.”

The small player

On opposite ends of the spectrum, lie the massive supply chain management businesses versus the niche logistics businesses, focusing on a specific part of the industry. One such business is relative newcomer Iyeza Express, a division of Iyeza Health.

Started by social entrepreneur, Sizwe Nzima in 2013, this bicycle delivery service delivers much-needed chronic medication from state hospitals to thousands of people in Khayelitsha, Cape Town. Forming a perfect synergy, Iyeza means both “it is coming” and “medicine”.

Iyeza Health has recently expanded its product offering with the introduction of an HIV self-testing device. The company’s mission, “linking our health logistics services with doctors, clinics and hospitals, as well as patients, to offer accessible alternatives to the current status quo in the pharmacy distribution and supply chain,” is impressive. With these stated objectives, this is one business to watch.

The disruptor

“Individual businesses and supply chains must manage their transport costs by planning routes and loads more efficiently and partner with suitable logistics companies,” wrote Johanna Badenhorst-Weiss and Beverley Waugh, in a study published in the Journal of Transport and Supply Chain Management in 2015. It is this philosophy of partnerships that lies at the heart of a new business that looks set to be a game changer in the industry.

In 2016, Naude Rademan, managing director of logistics company CCS Logistics, and a handful of colleagues launched Linebooker, which is a simple online (and mobile-friendly) bidding platform. Linebooker connects transport customers and trucking companies to offer transparent pricing and end-to-end delivery facilitation services to the benefit of both transport companies and
their customers.

“The company is seeing exponential growth in the number of customers and transporters using the online platform,” says Rademan. “By mid-2017, it is expected that Linebooker will be facilitating more than 2 000 loads per month, without owning a single truck.”

This is an exciting business concept if you consider the costs of running a fleet. “Many new entrants do not make it in this industry as they under-estimate the high load utilisation factors. If you only secure freight in one direction you are obviously much more expensive,” says Professor Stephan Krygsman, associate professor for transport economics at the Department of Logistics at Stellenbosch University.

Faced with ongoing disruption that is largely being fuelled by technology, almost every industry is being forced to rethink traditional strategies and their operational approaches.

“As a leader in developing smart supply chains, we at Barloworld Logistics constantly keep our finger on the pulse, analysing trends and creating ways in which new methods and viable disruptive technologies can be adopted,” says Stubbs. “Without being open to internal change, we cannot survive rapid external change. In today’s world, we are either the disruptors or the disrupted.”