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Dachser SA MD outlines trends impacting on SA logistics market

26th August 2016

  

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Over the past year, South African businesses have functioned in some of the toughest environments to date. World exports, as a percentage of global gross domestic product, have experienced a slowdown, while macroeconomic changes and shifts in trade patterns are impacting on global supply chains. However, despite these challenges, logistics group Dachser South Africa (SA) MD Detlev Duve believes there are fast-evolving opportunities that the South African logistics sector can harness.

One such opportunity, he says, is offering logistics solutions for e-commerce and omnichannel commerce, particularly as manufacturers and retailers adopt multichannel strategies to provide customers with personalised and promptly delivered products.

“E-commerce has rapidly become the engine of growth in consumer goods and retail. Right now, the reality is that most South African companies still have some way to go before they have well-developed logistics structures to master business-to-business and business-to-consumer logistics.”

Dachser SA has adapted its logistics solutions in response to the e-commerce market. The group offers solid warehousing infrastructure and value-added services to allow e-commerce businesses to outsource the storage and distribution process. This allows them to save costs and avoid tasks, such as inventory management and complex handling, that are outside their core competence.

Duve believes that companies should also be ramping up their investment in technology to provide logistics in a world where the so-called fourth industrial revolution, dubbed Industry 4.0, is gathering pace. Industry 4.0 will result in supply chains that are able to move products from vast quantities to single items using flexible processes.

“End-to-end visibility is a necessity. In fact, complete visibility of the entire supply chain could achieve true demand-driven planning, allowing efficient response to changes in sourcing, supply, capacity and demand.”

Innovation will become even more important to companies as they seek to respond to the changing market dynamics and cope with a challenging environment. In the South African context, Duve says many companies still operate from fragmented enterprise resource planning and supply chain management systems, which were originally designed for an individual company. In 2016 and beyond, this is no longer going to meet client needs and is in stark contrast with the technology requirements of a globally connected business environment.

Logistics companies should also be mindful of the negative impact that certain “positive” global trends, such as falling oil prices and the proliferation of megaships, could have on local and African markets.

While the falling price of oil has enabled international freight movements to become cheaper, Duve cautions this could have a dampening effect on nearsourcing, which has been gaining momentum in local markets. Local logistics companies should expect some reduction in the local activity that was previously attributed to this trend. The upside is that air cargo volumes may increase.

Massive sea vessels, such as the 20 000 twenty- foot equivalent units, are no longer a rarity and continue to get bigger. This affords manufacturers and retailers a lower unit cost when moving goods around the world. However, only a small percentage of ports are able to support ships of this magnitude, which will mean a reduction in the number of direct calls. Emerging markets, where the ports are consistently smaller, could well see an increase in shipping and logistics costs.

Duve further believes that emerging markets are “opportunity rich”, despite ongoing geopolitical instability that increases risks for logistics companies operating in those markets.

“Dachser SA is able to mitigate a number of risks when transporting goods into the continent through a strongly forged network that extends into emerging markets.”

Finally, the Dachser SA MD stresses the importance of customer satisfaction, highlighting the need for a fully integrated customer experience in the logistics environment.

“Logistics may offer intelligent networks, high-performance transportation and infrastructure, and cutting-edge information technology, but if these processes are not customer-focused, they will ultimately fail.”

Supply chains in South Africa have been experiencing declining customer-service satisfaction levels for the past decade, with the biggest constraints being a lack of appropriate skills.

“Both in South Africa and on the [rest of the] continent, professional training in logistics is lacking. It is crucial to have work-ready, skilled staff, particularly when companies are decentralised. Many decisions are made immediately on-site, in close proximity to the customer. Staff should be able to provide customers with a positive experience at every step in the logistics offering,” Duve says.

To address this lack of skills, Dachser SA set up a training programme in partnership with the South African freight and transport industry in 2012. The company directly employs most of these graduates upon the completion of their training.

Hall 5 Stand F15

Edited by Creamer Media Reporter

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