Smoothed freight and transport index registers 15% decline in April but raw data shows 40% drop
“Very few industries will escape the COVID-19 crisis and subsequent lockdowns around the world. The result is that the world’s transport logistics and supply chain management are in a real mess. The world is witnessing the virtual total collapse of an industry sector that is vital to the global supply network. By the end of May, it is probably at its worst, resulting in a mess will take months to clear.”
“It is no good looking in the rear-view mirror,” continued Hein Jordt, Managing Director of Ctrack, the company that compiles the Ctrack Freight and Transport index for southern Africa.
“Now is the time to look ahead through the windscreen and develop manageable strategies and business plans to get your business back on its feet. We, at Ctrack, are very aware of the hardships that lie ahead and the fact that the business environment will be more competitive than ever as everybody does their best to recover from this devastating economic setback we are all suffering,” he said.
For April, the latest month for which a full data set is available, the index has plummeted by almost 15% with the expectation that end-of-May data will be even worse.
Trucks wait for days to cross borders; ships wait weeks outside ports; and aircraft are grounded for months. Some countries are running out of storage capacity for petroleum products. Many importers are now being forced to store goods locally at huge cost as demand has dried up. Cargo transfers from one country to another have declined by almost 40%.
“Governments are not co-ordinating much in terms of logistics and supply chains, while fearful and economically challenged consumers are leaving warehouses full and supply chains stranded. This is resulting in cargo being left stranded at sea, on trucks and trains as well as at factories and warehouses. Rail is still delivering to ports but mountains of bulk commodities, such as coal and iron ore, continue to grow and add to the chaos.”
Jordt commented that the dramatic decline of 14.7% in the Ctrack Freight and Transport Index for April is an important indicator of the very worrying situation that currently exists in the logistics and transport sectors of southern Africa. The fact that the data is smoothed to show trends does not fully reflect the logistics horror now apparent in South Africa.
“The volume of goods shipped and landed in South African ports was less than at any time since the year 2000. We believe that we are probably back to levels last seen in this country before 1994.”
Road freight volumes, even when smoothed, were the lowest since 2008 while rail is at early 2008 levels and declining further. “We have reports of truck drivers going hungry at border posts and food and medicines stuck at borders between some African countries. Regulations have been changed so often that it is a fulltime job for industry bodies such as the Road Freight Association (RFA) to keep abreast of the many changes. Smaller operators in all transport and logistics sectors are struggling to keep up.”
The road freight sector, which has been operating partially since lockdown in March, transported 16,5% less cargo than a year ago. Again, this number is smoothed, and the raw monthly data reveals a decline closer to 40%. However, due to the volatile nature of this data we have used a rolling three-month average. We expect slightly better monthly numbers in May, but the rolling three-month average will be lower still.”
“Now is the time to think out of the box. Be innovative. We have to reset everything to deal with a new normal. We only have a limited timeframe to reach out to existing customers and assure them of our ongoing support so as to retain them,” stated Jordt.