1. Supply Chain Collaboration in a wider context:
The role of government and the railway
Jan Havenga
Department of Logistics
Stellenbosch University

2. Logistics costs as a % of GDP – a 12 year time series

3. South Africa’s logistics costs in perspective

4. Logistics cost components tracked over time

5. South Africa’s freight profile….
Current freight Future freight

6. South Africa’s freight demand
What does it say about how we manage freight
transport?
I’ve not seen a single transport indicator, where South
Africa is lower than world average

7. Demand side
• Reshoring (trade reduction)
• Lower choice
• Consumption at source
• Recycling at source
• 3D printing
Supply side
• More efficient trucking
• Drivetrain
• Fuel
• Driving habits
• More efficient logistics
• Scheduling
• Visibility and collaboration
• Lower empty haul
• Modal shift
Solutions

8. Tonne-kilometers by mode and typology

9. Rail friendly freight – The case for corridors
• Natal economic corridor • Natal rail friendly corridor
We estimate that between 40 and 60% of corridor
freight is rail friendly
• Cape economic corridor • Cape rail friendly corridor

10. •Imagine the iron ore line
• 20 000 ton train
• Single pick-up and offloading point
• Easy loading and discharge tech
• Commodity universally similar
• Unfortunately one-directional
• At 6c a ton-kilometre – a no brainer
• Not all freight can be categorised
like this
• But where is the cut-off?
• What does it mean?
• Heavy
• Unitised commodity
• Densified pick-up and distribution
• Specialised equipment/high volumes
• Bi-directional flows would be great
• Returns to density/learning curve for
transhipment could drastically reduce
costs in similar market segments
What is rail friendly?
BUT

11. Heavy intermodal fits the bill
• And that includes domestic intermodal
• But how large is this freight segmet?l
• Average is 700 TEU train
• Experiments with 1 200 TEU ongoing

12. Searching for ∆
∆
Cost
0 d* d Distance
Intermodal
Road-only
Intermodal*

13. What informs ∆
• Volume and average travel distance
for different logistics systems

14. What informs ∆?
• Identify viable market spaces
• Macro reconfiguration leading to
• Lower fixed cost contribution (all involved)
• Learning curve opportunities to lower all variable costs
• Lower transaction and administration costs
• Negotiation and service design in good faith

15. The typical FMCG long distance supply chain has
natural “catchment” areas
DC DC
M R
M R
DC DC
M R
M R
DC DC
M R
M R

16. And logistics hubs should form
DC DC
M R
M R
DC DC
M R
M R
DC DC
M R
M R
Terminal
Terminal
Natural Logistics Hub Natural Logistics Hub

17. We’re stuck with this version of FMCG heavy haul…
17
Source: Rapport, 31 July 2011
Is this a train?
Definitely not effective. This can be done cheaper

18. Collaboration – 4 spheres
• Freight owners
• Logistics service providers
• Railway
• Regulator
18

19. 19
Government
1. Framework for PPP
2. Internalise externalities
3. Industrialisation without industry
engagement impossible
4. Centre of Excellence
Railway
1. Lower contribution to fixed cost (initially
none?)
2. Visibility (Cost and Cargo)
3. Leaning curve assumptions
4. Lower overheads and transaction cost
LSP’s
1. Change fixed cost and overhead
assumptions
2. Visibility
3. Learning curve assumptions
4. Accept change in risk / return profile
Freight owners
1. Environmental accounting
2. Lower transaction costs
3. Outsourcing
4. Change purchasing habits
5. Choice?