Logistics sector sees recovery in May despite slower growth

From the beginning of 2024 air Transport stood out as the best performer among the sub-sectors. In May, it grew by 15.4% compared to December 2023, marking its fourth consecutive monthly increase and reaching record levels. Quarterly growth reached 18.0%, significantly boosting the overall recovery of the logistics sector.

Despite a slight drop in cargo loads in May compared to previous peaks, levels remained high, with a 50.4% increase in March. The International Air Transport Association (IATA) reported strong global demand, with air cargo tonne kilometres (CTK) up 11.4% year-on-year, supported by all regions and major trade lanes. Africa’s annual CTK growth of 10.6%, despite a 2% global market share, reflects positive trends across the industry.

In May Sea freight forwarding The sector bounced back strongly after a difficult April, with a 14.5% increase in the number of containers landed and a remarkable 45.5% increase in the number of containers shipped compared to the previous month. Other cargo handled, excluding vehicles, also saw a 12.4% increase, reversing April’s decline.

Annual sea freight continues to grow by 5.4% compared to 2023 levels. South Africa continues to focus on reforming its sea freight sector, highlighted by Grindrod’s decision to increase the capacity of its Port of Richards Bay container terminal from 50,000 to 200,000 TEU per annum. This expansion is designed to align with the TNPA’s KZN Ports Master Plan, signalling progress on structural reforms that are key to broader economic growth and development.

In May in South Africa road transport The subsector, which dominates 83.6% of all freight cargo, continued its recovery with a monthly increase of 2.7%, marking the third consecutive month of growth after a year-on-year decline. On a quarterly basis, road freight was up a significant 8.6%.

Heavy vehicle traffic on the N3 toll road increased by 6.6% in May, in contrast to a double-digit decline on the N4 due to earlier travel restrictions and port issues diverting traffic to the Port of Maputo. As port activity recovered in May, additional traffic demand on the N4 has diminished.

In May in South Africa railway transport the sub-sector recorded a small contraction but continued its gradual overall recovery. From January to May 2024, rail freight increased by 11.0% compared to the same period in 2023, despite starting from a low base. Operation Vulindlela played a key role in this progress, aiming to increase Transnet’s capacity and reverse the shift of freight from rail to road.

The first phase of Operation Vulindlela recently concluded with praise for maintaining private sector engagement and government cohesion in the face of economic challenges such as the power outages in 2022/23. The ongoing second phase is expected to broaden its focus on the logistics sector and other network industries, indicating a continued emphasis on structural reforms.

In May storage and use The Ctrack Transport and Freight Index subsector fell 1.1% monthly, remaining only 1.6% higher than a year earlier. Inventory indicators fell during the month. However, total land and shipping container throughputs rebounded, rising 4.3% after a significant decline in April.

Meanwhile, liquid fuel transport via Transnet pipelines rose 0.2% from April to May but fell 0.3% quarter on quarter and 2.0% year on year, reflecting broad economic stagnation.

Transport sector could boost GDP in Q2

With two months of Ctrack TFI data available, indications point to a quarterly increase in the index, suggesting a potentially positive contribution from the logistics sector to economic growth in Q2. Historically, the transport and communications sector has often outperformed other sectors of the economy, notably growing by 3.5% in 2023, while overall GDP only grew by 0.7%.

However, in Q1 2024 the sector contracted by 0.5% q/q on a seasonal basis, which contrasts with a 0.1% contraction in the broader economy. Despite this slow start, Q2 is promising, with expectations that the transport and communications sector will continue to outpace overall economic growth in 2024.

“Over the past two years, since the establishment of the National Logistics Crisis Committee, supported by the resources and expertise of the business sector, a new form of cooperation has developed between the public and private sectors, facilitated by the efforts of the Operation Vulindlela team.

“While significant progress has been made in implementing the reform agenda, it is crucial that the new government continues and accelerates action in the interest of the entire economy,” says Hein Jordt, CEO of Ctrack.