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e-Toll Gantry

With the cost of doing business set to increase in Gauteng with the commencement of E-toll tariffs, Gerrit Prinsloo, Director and Transport and Logistics Specialist at SizweNtsalubaGobodo says that because Gauteng is the only major industrial centre in the world not situated on a waterway, the relative location of points of production and points of consumption make South Africa more dependent on land freight transport than most other countries.


“The 9th State of Logistics™ survey for South Africa 2012 indicates that logistics costs as a percentage of total GDP have risen by 0.7% to 12.6% in 2011 and are estimated to have risen further to 12.8% in 2012. The impact of E-tolling on this particular industry alone is therefore huge,” he comments.


Prinsloo says that while transport business owners will undoubtedly be faced with the short-term challenge of incorporating the additional cost into their pricing models, they already are and will continue to reap the benefits of increased efficiencies in the transport sector due to the increased road capacity.


“Because transportation costs increase when the transporter has to budget for inefficiencies due to traffic congestion, the additional capacity on our roads is therefore already benefitting transporters through providing access to increased efficiencies. So in effect once toll tariffs are implemented, only then are businesses going to start paying for the increases in travel costs which will have already been absorbed by the increased efficiencies provided by the new national road system,” he explains.

Prinsloo says increased traffic management intelligence from billing data as well as potential data becoming available from the E-toll system will allow transport business owners to streamline their operating models and routes.


“Information that predicts bottlenecks and congestion will allow for re-routing and thus promote accurate scheduling and network optimisation. Businesses however will be required to rethink their business model and behaviours to shape and sustain more efficient behaviours that optimise supply chain management. For example receiving goods during off-peak periods could dramatically reduce overall transport costs,” he says.


However despite certain advantages, Prinsloo says business owners still face the grim challenge of having to incorporate the additional cost passed on by transporters into their pricing models without hurting the bottom line or compromising their service levels.


“Once SANRAL has announced the finalised E-toll tariffs, businesses will have to move quickly to compare the various advantages and disadvantages inherent in changing their current behaviours. Potential changes to routes, travel times and the location of distribution facilities all need to be taken into consideration, and ways will need to be found to strategically absorb these additional costs into their pricing models. Ultimately businesses need to start thinking smart about travel and transport,” he concludes.

Published in Economy
Thursday, 22 November 2012 08:50

Regional Trading Blocs - the future of African prosperity

Multinational African organisations

In a landmark event for the logistics industry, earlier this year negotiations commenced in earnest for the establishment of a large free-trade area (FTA) integrating the 26 countries, 600 million people and USD1 trillion GDP of three trading blocs: the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).


Kate Stubbs, Executive Marketing of Barloworld Logistics, says: “When looking at markets, there is a tendency to compare sub-Saharan Africa directly with other countries such as India and China, when in reality the continent is far from being a homogenous jurisdiction. The so-called Tripartite FTA could be a major step towards the vision of a large economic unit in Africa, and if it materialises it will offer enormous opportunities for South Africa.”


She describes the challenge facing sub-Saharan Africa in the following terms: Africa remains the most economically fragmented continent, with intra-African trade accounting for barely 10% of its overall trade last year. In contrast, intra-trade among the European Union’s 27 nations is about 70%, 52% for Asian countries, 50% for North American countries and 26% for South American countries.


“The reason why intra-African trade is so low is the costs associated with the logistics of transporting goods: naturally, firms and businesses will tend to trade where it is more competitive. However, Africa is no longer isolated from what was happening in the world and can no longer afford not to focus on intra-African trade.”


Lack of infrastructure is a major reason why a colonial model of trade lingers so long after African countries attained independence. It remains easier to send goods to Europe, especially in the case of perishable goods which can take weeks to get to port. Stubbs says the emergence of China may serve only to aggravate this situation, as its infrastructure projects tended to integrate our supply chains with China, every bit as much as the legacy one links to Europe.


“Never, outside South Africa, has there been an infrastructure model made by Africans for Africans. Supply chains and infrastructure will play a pivotal role in the development of the FTA, and current plans to link the regions look feasible – in the longer term”


While the structures and secretariats already exist, the real work to be done lay in removing the actual barriers to trade – and these are not just tariffs. For instance, within SADC the Southern African Customs Union previously removed tariffs on 98% of goods without significantly altering trade patterns.


“The real barriers to trade are therefore to be found in the number of permits, the time it takes to cross borders, and in poor infrastructure,” says Stubbs.


Border posts have to be addressed one by one – but major success has been achieved in slashing the border crossing time between Zambia and Zimbabwe at Chirundu from well over a week to just under 24 hours for trucks, an hour for buses and 30 minutes for cars.


Beit Bridge between Zimbabwe and South Africa (the busiest border post in sub-Saharan Africa) is to receive the same one-stop treatment. The idea is that if one government accepts a permit, so does the other. Considerable infrastructure upgrade also goes with the improvement in systems.


“What is required is region-wide adoption of the Chirundu model – if a set of requirements is met in one jurisdiction it is accepted everywhere. This means a truck will not have to carry 13 sets of permits and have them scrutinised at every border post (both sides),” says Stubbs.


Already trade agreements and rules of origin are close to conclusion. Underpinning this heightened focus on intra-Africa trade is a rapid process of urbanisation, with Africa experiencing the fastest rate anywhere in the world, albeit off a low base.


Collectively, Africa’s GDP is expected to grow at an average rate of just over 5% between 2010 and 2020. Coupled with a fairly rapidly rising population – to about 1,3 billion people by 2020 – this points to a continent where economic prosperity may be a near-term reality. “But much of this reality will depend on Africa’s cities becoming more competitive in this new global urbanisation scenario, and for this it will require infrastructure and efficient logistics,” explains Stubbs.


It is clear that the opportunity for the logistics industry will lie with South Africa, and particularly with Johannesburg as being uniquely positioned to be a services and management hub for urban centres throughout the Tripartite FTA and more immediately, SADC.


Johannesburg is less constrained than elsewhere in Africa by the physical and infrastructural logistics challenges facing transport and industry. However, this urban growth will increasingly depend on collaboration between cities in different countries, something that requires political will.  


“As the services economy takes off across Africa’s growing nations, expertise in managing and maintaining a continent-wide services supply chain will be vital – and it is here that hopefully Johannesburg and South Africa will have a major competitive advantage in the future,” adds Stubbs.

Published in Trade & Investment
Google Traffic Maps

What if you could discover why your deliveries are delayed, or where to build your new retail store, by simply looking at a map? It’s amazing how looking at a problem from a geographical view can change our perspective – new insights, new ideas for action seem much clearer than when the data is presented in a graph or a table.

This is known as “spatial business intelligence” – data presented in map form for ease of analysis. It has already started revolutionising the way many businesses operate. Logistics companies use the data to avoid traffic jams or hazardous roads, airports have used it to prevent collisions with birds and police have made use of it to discern patterns and determine a criminal’s modus operandi.

But spatial business intelligence is only as good as the data that’s available. If fresh data on road works and diversions is missing from your traffic map you won’t spot the pattern behind those late deliveries or the sea of competitors located in the area you wish to enter.
Data has been potentially the single most limiting factor in developing spatially based business solutions. Sometimes it simply didn’t exist, but mostly – it was simply too expensive to access. The companies who gathered the data protected their intellectual property with hefty price tags, so that most businesses could ill afford to invest in an entire database.

Luckily, we’re seeing the dawn of Data-as-a-service. It’s now possible to integrate multiple feeds from different spatial data publishers, delivering real business value quickly and cost-effectively. The business case for spatial solutions has changed and it is likely to become a massive driver of innovation in the next few years.

But if you hope to take advantage of a spatial business solution, there are two important factors to consider:

  • How mature is the data feed

Examine the data feed carefully. Determine how easy, or difficult, it is to access and integrate, how reliable it is and how often it is updated. If one looks at the EU, we can see that there is good deal of accurate information available. Real-time weather and traffic feeds can be bought virtually anywhere, at a reasonable cost. This could well be where South Africa is headed. Whether you’re planning a route for a single trip or a complex delivery network, this information once properly integrated into useful applications results in dramatic efficiency improvements.

  • Managing delivery from multiple suppliers

Having said that, it’s not likely that one single data publisher will be able to supply all your needs. Systems designers will need to manage relationships with several different organisations at once and unless you have the capacity to manage this in-house - make sure you choose a partner who already has this network of relationships in place. Your partner should offer solid guarantees about quality of service and uptime – in other words, you shouldn’t have to worry about which data is coming from which publisher, the solution should just work.

Spatial business intelligence is still in its infancy in South Africa, but we’re rapidly catching up to the rest of the world. Familiarise yourself with the systems and process now, so that, when given the right data at the right time – you can design world-beating solutions that leaves your competition in the dust.

EDITORS NOTE: To try live data maping visit "http://goo.gl/maps/CEpp"

Published in Software
Monday, 02 July 2012 16:59

African Global Economic Growth

Africa on the Globe

Arguably, any company with a growth plan needs to look at Africa as a potential business option, as it is one of the few places that are currently showing growth.  Business in the region is however very different.  The African business landscape is definitely more relationship-driven in addition to being extremely price-sensitive, and with more and more companies piling in, it is very competitive.

It is important to stay abreast of the legislative requirements of each country and also to understand the impact of foreign exchange fluctuations, which can impact profitability rapidly.  From our perspective, we ensure that our branches not only abide by legislation, but we also prefer to employ locals from each of the countries we operate in. Not only does this afford locals the opportunity to assist in the economic upliftment of their own country, but it also helps us to better understand and deal with local business issues.


It is however crucial to do your research and to have solid financial controls in place before embarking on an African business venture.  The money trail is certainly a great deal harder to track in Africa as you don’t have agencies and companies that can readily do a credit check on a prospective client.  Business transactions can be very large, and companies often find that they will not be insured on a transaction for the full amount or not insured at all.  It is therefore of paramount importance to have an airtight financial management system in place.

Finding a balance between too rigid an approach to financial control systems and the building of a lasting relationship can be tricky though.  It literally boils down to having sufficient country knowledge on your side that needs to be supported by a strong ability to build lasting relationships and trust.  People in Africa are generally great to deal with and the cultural experience is fantastic, but it takes time and presence in a country to gain enough of a foothold to comfortably partner with prospective clients.

The logistics of doing business in Africa is a complex dynamic that needs to be considered.  By definition, you will be dealing with custom officials and varying country regulations on a regular basis, which in itself poses an element of risk.  Do you then deliver directly to the client or do the products become the property and responsibility of the client once it enters the country?  All of these logistical factors need to be considered and planned for when it comes to the establishment of a distribution network that works.

Keeping cash flow liquid in Africa is another challenge to contend with.  Financial transactions are a great deal more complex in Africa, but very rewarding.  Some countries are quite prompt with their payments whereas you can wait up to 90 days for payment from others, which diminishes your profits in the low-profit market quite significantly. We also find that the government and parastatals in each of the countries are big drivers of technological business.

The infrastructure within Africa is steadily increasing with connectivity improving a great deal.  Education standards, unfolding opportunities and the size of the economy in each of the countries act as a barometer to how Tech-savvy a country is.  All the countries are however growing with leaps and bounds from a technological point of view, which provides a perfect platform for businesses to expand its footprint on the African continent.

Published in Venture Capital
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