Heavy rains and floods that occurred in Kwa-Zulu Natal in mid-April had a severe negative impact on the South African logistics sector. The flooding was particularly devastating in the Durban-South area and resulted in a major disruption to the Port of Durban, the fourth largest in the Southern African Development Community (SADC) region.
The overall Ctrack Transport and Freight Index for April 2022 declined by 0.4% compared to March but was still up by 8.6% compared to a year ago, although this represents a setback compared to March’s strong 12.4% year on year increase.
Graph 1: Ctrack Transport and Freight Index % change on a year ago.
Three of the six sectors that the Ctrack Transport and Freight Index measures declined during April, with the biggest contractions evident in Sea Freight and Rail, both of which were particularly hard hit by the floods in the Durban area. Not only the port but also surrounding roads were affected and resulted in activities grinding to a halt for a few days. The port is the primary multipurpose gateway to the main economic hub of Gauteng – with a key focus on containers, automotive and liquid bulk transport, and is critical for the stability of the South African economy.
Graph 2: Ctrack Transport and Freight Index and its components (% change on a year ago)
Taking a closer look reveals that container handling dropped by 22.8% in April compared to a year ago, while other cargo handling (excluding vehicles) dropped by a notable 16.8%. Because the Ctrack Transport and Freight Index is calculated on a three-month moving average, the impact is somewhat softened, with Sea-Freight declining by 7.8% in April compared to a year ago, which was the biggest decline for this sector since August 2010.
Rail Freight also declined further during April and now indicates a 13.4% year on year decline. This continuous decline can partly be attributed to the damage to the Durban Port. In addition, sections of the main railway line between Cato Ridge and Durban were impacted for days by severe wash aways and mudslides, particularly in areas where communities have encroached on the rail reserve. In addition to the flood-related challenges, ongoing issues pertaining to inadequate infrastructure and crime incidents on rail lines remain relevant and contributed to a 2.9% overall year on year decline in the Rail Freight sector as measured by the Ctrack Transport and Freight Index.
“The devastation caused by the floods in KZN was tragic to behold. However, it is truly impressive how the industry has recovered and shows the transport industry’s commitment to the South African economy recovery, despite all the ongoing disruptions from a variety of external factors,” says Hein Jordt, Chief Executive Officer of Ctrack Africa.
Transport of liquid fuels via the Transnet Pipeline Lines (TPL) remained mostly unaffected during April, with no weather-related impact. TPL has also accumulated stock at the Jameson Park Terminal to feed the reef (Gauteng) and ensure supply security for the inland market. The overall Transport via pipeline segment returned a 6.3% year on year growth in April.
Thanks to the gradual recovery of international supply chains and the normalisation of economic conditions post COVID-19, Air Transport continues to show steady growth. The Air Freight segment of the Ctrack Transport and Freight Index grew by 3.7% in April compared to a year ago. It is expected that Air Freight will continue to show growth as the international travel industry returns to more normal levels over the next year or two.
Graph 3: Selected components of the Ctrack Transport and Freight Index (% change on a year ago)
Road Freight remains the star performer among the various sub-sectors of the logistics industry, and during April, this was once again the case. Road Freight has certainly picked up where Rail Freight has fallen short in recent years. As such, the Road Freight segment of the Ctrack Transport and Freight Index returned growth of 19.8% compared to a year ago, which is the strongest growth outside of the recovery in 2021 from the Covid-19 hard lockdown levels. The changing landscape relating to online shopping and the fast-growing courier and home delivery sector remains an extensive contributor to the growth in the Road Freight sector.
Graph 4: Road vs Rail Freight components of the Ctrack Transport and Freight Index (% change on a year ago)
Ctrack Transport & Freight Index and GDP growth.
It is a well-known fact that in most countries, the transport sector’s performance and a country’s Gross Domestic Product have a close relationship. Similarly, in South Africa, the Ctrack Transport and Freight Index follows a similar trend to that of the South African GDP.
While this year’s Q1 real GDP growth was stronger than expected, with growth of 1.9% compared to Q4 2021’s revised growth rate of 1.4%, the latest figures measured by the Ctrack Transport and Freight Index indicate that the economy has lost some momentum in Q2. This could be due to various factors, including the flooding in KZN, Stage 4 load shedding during April and May, inflation, and higher interest rates. This trend, identified by the Ctrack Transport and Freight Index, was mirrored by a notable drop in the ABSA PMI and passenger vehicle sales in April.
While the May 2022 ABSA PMI did recover from the very low levels of April 2022 (54.8 in May vs 50.7 in April), the index remains below the March 2022 level (60.0), indicating that the post-April recovery could be slower than initially expected.
Graph 5: Ctrack TFI suggests a moderation in Q2 2022 GDP growth
Table 1: Change in Ctrack Transport and freight Index this month
“It is with great sadness, that we recently had to say goodbye to colleague and friend, renowned economist Mike Schüssler, following a battle with cancer. Schüssler and his team at Economists.co.za produced the Ctrack Transport and Freight Index data since its inception in 2019. During this time, the CTFI has become an economic indicator and performance gauge of the South African logistics and supply chain industries. Because the CTFI has become a trusted barometer by which our customers and the wider industry can gauge the performance of the transport sector as a whole, we are committed to continuing to produce these indicators, and will advise shortly on the format of this report as Mike was instrumental in these reports. Rest in peace, Mike. You will be sorely missed,” concluded Jordt.
Issued by Wilken Communication Management – Tel: 012-4604448