This post is also available in: Afrikaans
by Delia Cooney from Freight Innovations
Conducting business in the world post Covid-19 has proven to be extremely difficult and South Africa is no exception. Consumer buying patterns have changed the landscape with lessened discretionary income. Due to businesspeople working from home and the resultant lifestyle changes, cosmetic products are moving off the shelves a lot slower.
Appliances including television sets and various kitchen accessories are being purchased online as shoppers avoid malls, increasing pressure on logistics and last mile deliveries. With Amazon expanding its footprint in South Africa and Takealots’ expansion, opportunities for cost-effective deals for consumers are prevalent, shifting the emphasis to lower costs and rental overheads.
This will have a domino effect. Many malls have lost rental income and with the new regulation regarding anchor tenants being unlawful at a subsidised rental, the scene is set for a transition in property portfolios. Consumer trends include grocery shopping online and fast delivery from most supermarket chains, minimising the potential of promoting product sales through optimum displays and merchandising. This also prevents impulse buys which would usually be a reliable source of turnover.
Some industries have shed employment which is likely never to be recreated, with tourism, restaurants, curios and beauty treatments being the most affected. Although inflation is said to be 2,9% down from 4,5%, it is unlikely that this refers to food inflation, which undergoes significant price fluctuations. This is directly linked to the fuel price as this is regularly amended in the form of a fuel surcharge. It has been stated in the media that the costs are also influenced by crime, as reports indicate that huge fraud takes place in transport companies due to diesel theft.
Not only is the economy under duress from the effects of Covid-19, but the use of petroleum has also lessened and with the advent of the Teslas in the world, the future may hold financial difficulties for the oil producing countries. With artificial intelligence at the forefront of development, this may affect farming by reducing the reliance on labour and expediting mechanisation, influencing job creation.
This should have a domino effect and reduce the costs of farming, which should reduce the end price for the consumer. Whilst climate change continues to dominate, pollution has escalated and non-compliance by municipalities has escalated sewerage disposal, which has resulted in raw effluent contaminating drinking water, rivers and dams. Undoubtedly, this will further impact the economy.
Whilst medical costs are relatively stable, hospital shares reflect a much lower return as preparation for the pandemic did not result in hospitals being utilised – it had the opposite effect. Although the role of doctors’ practices, which included surgical and theatre facilities increased in importance as this offered operating services, hospitals were reserved or limited due to Covid-19.
The cost of doing business in South Africa has become more complex with the prolonged attacks on truck drivers and hijackings. Once extrapolated, this have resulted in increased costs for most products and with the cost of insurance rising, the consumer will foot the bill for crime yet again. Insurance companies are hiking premiums and including exclusions as well as increasing excesses in a bid to cut costs as crime increases. The pandemic resulted in the wide distribution of highly valuable personal protective equipment, which became the target of organised crime and hijackings. This type of cargo is currently virtually uninsurable and tutelage depends on the supplier, again impacting the cost of doing business as well as the product.
Online tutorship has increased, lowering the use of vehicles and subsequently affecting the motor industry. With large corporates making factory production of tyres redundant, smaller players are entering the market to supply stock, directly influencing job cuts and increasing the role of logistics in the logistics value chain. Pressure on Cape Town Port has lessened due to the pandemic and ships being unable to travel. Much of the sea freight cargo appears to be routed via Durban Port which has improved service levels after a long battle with service failures and delays.
The continuation of stable food supplies in South Africa to supply the domestic markets, as well as neighbouring countries remain under pressure due to a variety of factors, which include the ongoing drought in certain areas, political uncertainty, unrest and trucks being continually attacked, which has had an impact on transit times due to trucks only being able to travel during the daylight hours.
With huge challenges in the food supply, less purchasing power due to job losses could affect sales. The resulting economic downturn would be lower prices and the ultimate creation of employment in the long run. South Africa is once again the financial leader in the continent. Nigeria fell back after the country surpassed the South African economy in recent years. The Nigerian gross domestic profit contracted by 6,1% in the second quarter of 2020.
The stage is set for interesting developments on the continent, with logistics playing a pivotal role in growing the economy.
Freight Innovations will fight the fight alongside you in these tough times. Visit them at www.freight-innovations.co.za and click on the red instant quote box to quickly get a price to send anything anywhere. Contact +27(0)86-177-7913 or e-mail firstname.lastname@example.org or www.freight-innovations.co.za for more information.