South Africa Freight and Logistics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

South Africa Freight and Logistics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

The South African Freight and Logistics Market are estimated to witness a CAGR of approximately 4% during the forecast period.

Major shifts in transport patterns due to COVID-19 have a major impact on a large part of freight transport in the way they have to organize businesses supported by logistics to keep growing profits.

Regulations were also reviewed to respond to the changes in the sector. In February 2021, the cabinet approved the revised White Paper on National Transport Policy, still to be gazetted, that incorporates changes in the road, rail, maritime, and aviation sectors and aligns the total transport sector to international, regional, and continental transportation trends.

With consumers demanding ever-faster delivery times, and the high costs associated with servicing the last mile, retailers and logistics operators are pushing to improve their distribution models, reduce inefficiencies, and hold stock closer to consumers. This strong occupier demand to hold stock within urban areas is supporting investor sentiment.

In South Africa, requirements for new, modern, and efficient distribution centers remain stable, and demand has outperformed all other asset classes and industrial sub-segments, resulting in an overall income return of 9.2% and capital growth of 0.8% in 2020-21. A good example of the focus on prime warehousing space has been Takealot’s recent leasing of approximately 11,000 sq. m. of space in Montague Park in Montague Gardens.

South Africa is experiencing a record trade surplus in the wake of the COVID-19 pandemic, with the exports far outpacing imports.

South Africa's trading partners have seen increased growth in their economies, driving their demand for South African products.

These export flows have been channeled into key trading partners in Asia, including China – South Africa's largest trading partner – Japan, and India. The US, Europe (especially Germany), the United Kingdom, and the Netherlands have also increased their demand for local products, and so have Namibia, Botswana, and Mozambique.

Key commodity and product drivers include agricultural commodities such as citrus, maize, apples, and grapes; manufactured goods including local machinery and equipment as well as motor vehicles; and major mining outputs including precious metals, iron ore, and manganese.

• The country's cumulative trade surplus for the first four months of 2021 now stands at SAR 147.83 billion, compared with a trade deficit of SAR 4.41 billion over the same period in 2020.

BLACK Friday deals in South Africa boosted retail activity to rise above market expectations in November 2021, buoyed by a rise in clothing and general dealers’ sales. Data from Statistics South Africa (StatsSA) showed that retail trade sales surged by 3.3% in November from a year earlier, up from an upwardly revised 1.9% rise in the previous month.

This was the third consecutive month of growth in retail activity and the strongest since June 2021, well ahead of the market’s forecast of a 2% increase. Six of the seven major categories of sales recorded annual expansion in November 2021.

• However, retail activity was mainly boosted by sales of textiles, clothing, footwear, and leather goods, which rose to 10.3% in November from 6.2% in October 2021. General dealers also recorded robust growth of 3.6% from 0.3% the previous month. The only category that contracted was “hardware, paint, and glass,” which declined for the fifth consecutive month in November, easing by 0.2%.

The market landscape is fragmented in nature, and most of the players are small- and medium-sized firms providing low-value-added logistics services. The market is competitive due to the presence of domestic and international freight and logistics companies. Companies are seen adapting to the latest technological advancements to provide better services to the customers, which will further increase the competition.

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