South African Logistics Market, Forecast to 2020
Global financial crisis, weak domestic demand, and other related factors have affected South Africa’s GDP growth during past 3 years, continuing onto 2016. The GDP of South Africa accounted for 0.42% of world GDP in 2016. The economy is expected to grow at a rate slower than the population growth rate in 2017 and 2018, implying a lower standard of living in the time period, as measured by the GDP per capita. A better global economy, combined with stimulation efforts by the Government is expected to result in positive economic growth of the country from 2016. However, this growth is expected to below world’s and sub-Saharan region’s forecasts.
Economic growth has been driven mainly by trade, tourism, and communications; South Africa’s trade performance is expected to witness positive growth from 2016. With one-third of South Africa’s export being commodities, changes in global demand for these commodities owing to muted domestic demand will have considerable effects on South Africa’s export value in the future. Owing to potential US tariffs on imports from China and Mexico expected to have an impact on global trade flows, the exporters in these countries will look for opportunities in alternative markets which could, in turn, present export opportunities for African producers in American market.
In order to achieve a spark in economic growth during 2017-2018, the government of South Africa has made significant investments on upgrading its ageing road infrastructure. This, in turn, is likely to boost the logistics market by 2020. South Africa’s efforts in increasing exports of goods and services in the region and positioning the country as a hub for African regional and global engagement through trade agreements will necessitate complementary measures such as improved transportation and regulation for increased trade.
Over 89% of freight in South Africa is over the road network; resources have been allocated for maintenance and rehabilitation of network throughout the country, while rail network accounts for 80% of total African infrastructure. Extensive rail network connecting with other networks in sub-Saharan region and neighboring countries provides major opportunity for businesses to prefer rail network over road if operational efficiency of former is increased. Increasing trade demands and improving infrastructure holds potential for businesses with long-term strategies. Market development for 3PL logistics players will depend on advanced technology-based solutions with better service offerings. With steady growth of international trade, South Africa’s logistic sector is expected to witness 3.7% growth over the next 5 years; focus on promoting industries and exports is likely to drive opportunities for international logistics services in South Africa. South Africa's export trade with the rest of Africa is expected to double, as more agreements are signed and processed.
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