Logistics South Africa: Point of a new world trade corridor
New trends in the logistics industry, including new trade corridors, new industry participants, many takeovers and the swing to greener materials handling processes, are all contained in a major survey published recently by PricewaterhouseCoopers, writes UDO RYPSTRA.
New trade corridors between Asia and Africa, Asia and South America, as well as trade within Asia, will rechart global supply chains and “South Africa will emerge as the point of a new transport corridor to Asia. Significant investments will be needed in transport infrastructure and the logistics industry in Africa to develop new transport routes and expand existing ones. Asia’s heavy industry will still continue to play a pivotal role in the global demand for iron ore and coal.”
These are some of the findings of a major international survey, Transportation & Logistics 2030, released last month. Published by PricewaterhouseCoopers (PwC), the report draws on the results of RealTime Delphi surveys of over 100 panellists from 29 countries as well as the insights of PwC specialists from around the world.
The survey was conducted by PwC in co-operation with the Supply Chain Management Institute of the European Business School. Of significance to the South African logistics industry is the third (and last) volume of the T&L 2030 series. Called “Emerging Markets – new hubs, new spokes, new industry leaders?”, it is a multi-faceted analysis of transportation and logistics in emerging markets and the impact on global supply chains. It examines how regulation sets the scene for investment and growth, how new transport corridors span the globe, how industry consolidation accelerates and service levels improve and how the competitive environment at home and abroad emerges.
In doing so, it took a closer look at seven specific emerging markets: Brazil, China, India, Mexico, Russia, South Africa and Turkey. Some of the key findings “that should inform decision-making in the T&L industry until 2030” are:
• New trade corridors between Asia and Africa, Asia and South America and within Asia will rechart global supply chains. Trade volumes will shift towards emerging markets and least developed countries will take their first steps into the global marketplace.
• Privatisation has already helped fire up China’s economic growth and other countries like Turkey are also looking to benefit from increased efficiency and better access to capital.
• Emerging market players are unlikely to dominate developed markets; instead they will build competencies and market share in more attractive home and emerging markets.
“The emergence of new logistics service providers to challenge the market share of established companies will become the status quo that will change world trade by 2030. Increased competition will also lead to a wave of industry consolidation and the number of logistics providers is expected to fall sharply.” PwC analysis showed that 69% of companies that had been taken over during the second quarter of 2010 were located in Asia and Oceania.
The first volume of the report, which deals with the evolvement of supply chains in an energy-constrained, low-carbon world, provides a global perspective on the ramifications of energy scarcity and how it is set to reshape the industry. “Energy scarcity, consumer behaviour, transport modes and future supply chains represent discrete aspects of how the future may evolve in T&L, each of which is likely to impact the others.”
It says some key findings that should inform decision-making in the T&L industry until 2030 are:
• Oil prices will increase and so will the use of alternative fuels, however neither are likely to revolutionise T&L, but the need to track, document and allocate costs for emissions just may.
• Supply chain design, including the location of production sites, will need to take energy and emission costs related to logistics processes into account. There will be no reverse of globalisation, but many supply networks will be established at a regional level.
• Patterns of individual mobility vary in different regions; however, concerns about cost and carbon footprints will spur individuals to reduce holiday and business travel and consume more locally produced goods.
Volume 2 of the report provides a global perspective on the status quo of transport infrastructure and its development and how it is set to reshape the transportation and logistics industry. It deals with four discrete issues for transport infrastructure − supply and demand prospects, finance mechanisms, regional competitiveness and sustainability − and looks at how each area might evolve, as well as how they interconnect.
Here are some of the key findings that should inform decision-makers in the T&L industry until 2030:
• The quantity of goods needed to serve the world’s rapidly growing global population will increase over the next twenty years. And the demand for transport infrastructure is unlikely to be fully met in this period – if ever.
• Public officials need to find an appropriate balance between investments in transport infrastructure and an ongoing financial commitment for the maintenance of existing facilities, and should ensure that maintenance needs are incorporated into the funding structure of all new projects.
• Large-scale implementation of road pricing is foreseen, so users should be prepared to pay more for using transport infrastructure in the future.
• Environmental costs will become an integral part of assessing the full costs of a transport infrastructure and will need to be calculated into the business case for any project.
Dealing with competitiveness, the report says getting transport infrastructure right is critical. “The presence or absence of transport networks which facilitate efficient supply chains is already a factor in investment decisions around the world; the ability to offer a solid infrastructure is likely to become an even more important criterion in determining a country’s or region’s competitiveness in the future.
Transport infrastructure remains a deciding factor for the economic prospects of a country. “Those regions which are able to implement ‘Infrastructure 2.0’ – which means a system fully integrated with modern information and communication technology (ICT) – will benefit most. ICT will be a key enabler for the development of cutting-edge transport infrastructure, and transport infrastructure development should focus more on integrating digital infrastructure.”
It says individual regions will also be able to increase their competitive position by taking full advantage of the potential of logistics clusters. The close collaboration of industry, academia and government in such clusters would activate new potentials in transport infrastructure development.
Dealing with energy, the report says energy supply and demand represent one of the most significant issues for T&L companies and will continue to play a defining role in the future of the industry. Oil price volatility was a significant risk to the sector, although PwC’s research suggests that oil prices were highly unlikely to rise in the order of magnitude necessary to trigger truly revolutionary change over the next 20 years.
The report says alternative energy may take up some of the slack engendered by diminishing oil reserves. Over half of the respondents predicted an optimistic future scenario in which alternative energy accounted for up to 80% of their overall energy mix in some countries. “They do not believe a major energy turnaround will be achieved by 2030. One area where there is consensus, however, is around carbon emissions. We see reducing emissions as posing a greater challenge to T&L companies over the next 20 years than obtaining a sufficient supply of energy.”
The report also states that nearly 70 per cent of the Delphi panellists anticipated that by 2030 systems would be in place to ensure that the cost of carbon is allocated to the causer, a development most of the experts surveyed saw as a positive one for the sector. Concerns about cost and carbon footprints would also increasingly change consumer behaviour. This could affect the future development of transport modes and their interrelation in the modal split.
Like PwC, the World Bank foresees economic growth continuing to be strong in Africa this year and carrying into next year, with the possibility of being even stronger. “Investments in infrastructure are paying off and African raw materials are in more demand than ever on global markets,” according to Global Economic Prospects, the World Bank’s biannual report on global economic trends. It says sub-Saharan Africa is enjoying good short-term economic prospects and notes that Africa’s gross domestic product (GDP) jumped 4,7 per cent in 2010, a trend that is expected to hold steady in 2011 and 2012, at 5,3 per cent and 5,7 per cent, respectively.
The full PwC report can be downloaded at: http://www.pwc.com/gx/en/transportation-logistics/tl2030/emerging-markets/index-ver3.jhtml