Transnet’s CEO, Siyabonga Gama, speaking at the FACE2FACE 3S MEDIA interactive Forum on the 19 April 2012 highlighted the cost of logistics in doing business in South Africa. Albeit being a little dated, the graph below shows South Africa’s cost of logistics, as a percentage of GDP, compared to a few other select countries.

Table 1: Total logistics costs as a percentage of GDP for selected countries
Country Survey Year % of GDP
Morocco 2006 20.0%
Finland 2008 19.0%
Thailand 2007 18.9%
China 2006 18.0%
South Africa 2009 13.5%
India 2007 12.0%
Brazil 2008 11.6%
Netherlands 2009 10.1%
Sweden 2005 9.1%
USA 2009 7.7%
Europe 2005 7.0%
Switzerland 2009 1.5%

What is clear is that developing countries generally have higher logistics costs with transport cost a significant component. For example, South Africa stands at 13.5% whereas Europe stands at 7.0%. This directly impacts the overall competitiveness of the country – the cost of doing business.

In South Africa, rail has an 11% (tons) or 31% (ton/km) market share of total freight transport. In looking at the Eurozone countries, where these countries have a well-developed rail infrastructure integrated with a road freight service, this country is out of sync. There for greater tonnages of traffic conveyed by rail would make a significant contribution to reducing the cost of doing business in South Africa and is the justification of Transnet’s “Back to Rail” strategy.

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