Competitiveness Of South African Industry Research Articles

Background: On a national level, South Africa’s freight logistics industry is inefficient. The country ranks 36th out of 40 countries in terms of transport productivity (tonne kilometres as a ratio of gross domestic product, or GDP); the ratio of freight logistics costs to GDP measured 11.1% in 2013, compared to that of developed regions which measures in the order of 9%; and rail tonne-km market share on the two most dense long-distance corridors, namely, GautengDurban and Gauteng-Cape Town, is only 12.8% and 4.4%, respectively, whereas rail is globally acknowledged as a more efficient provider of long-distance freight solutions, given appropriate investments and service commitments.Objectives: A cornerstone of improved national freight logistics performance is the availability of reliable indicators to quantify the efficiency and capacity of the logistics network over the intermediate and long term, thereby enabling an evidence-based policy and investment environment. The objective of this article is to describe the foundation framework (i.e. phase 1) for South Africa’s freight corridor performance measurement system (CPMS). Once populated, the CPMS will be a key generator of indicators to facilitate the systemic management of corridors as a national production factor and thereby contributing to South Africa’s competitiveness.Method: The design of South Africa’s CPMS was informed by desktop research and refined through an extensive stakeholder consultation process. A distinction was made between South Africa’s dedicated bulk corridors and the multi-modal corridors.Results: Facilitating both stakeholder involvement and agreement on key indicators, as well as the eventual development of a system supporting the population, aggregation and dissemination of the CPMS are critical outcomes for the management of corridors as a national production factor. Three overarching corridor indicators were defined, relating to increased throughput, lower costs and optimal modal application – the key rationale to improve the competitiveness of South African industry. This is supported by three corridor measurement perspectives, that is, a policy, customer service and infrastructure perspective. The purpose of the policy perspective is to support the role of national government in facilitating logistics competitiveness and equitable access through appropriate policy instruments. The customer service perspective should track service reliability and efficiency as contracted, at costs and cycle times that facilitate the competitiveness of the freight owner. The infrastructure perspective indicates whether sufficient capacity is provided, and whether this capacity is both available when required and utilised optimally.Conclusion: Elevation of logistics to the macroeconomic realm through the development of appropriate indicators will enable the management of logistics as a national production factor, thereby contributing to reducing national freight logistics costs and improving industry competitiveness.