Standard of logistics in South Africa is world class

JOHANNESBURG – Logistics is the management of the flow of things between the point of origin and the point of consumption. It refers to what happens within one company, for example, the purchase and delivery of raw materials, packaging, shipment and transportation of goods to distributors. Companies cannot survive without proper logistics management; it helps increase productivity.

The South African logistics and transport industry is closely linked to the current state of the economy, and logistics companies, in general, suffered in the past few years. Except for Value Group, the share prices of companies like Super Group, Imperial Logistics, Santova, Onelogix, and Grindrod was a huge disappointment over the past five years. They are priced for more bad news, and price-earnings ratios are below 10.

A good example is Onelogix: In 2015 the share price was almost double what it is trading at now, but profits were only half of what they are now.

The industry is highly competitive and continues to place pressure on operating margins; this emphasises the importance of stringent cost controls and the upkeep of a strong balance sheet. Globally, the logistics industry has also experienced pricing pressures and increased competition.

The recent results from KAP Industrial Holdings showed that its Unitrans division experienced an extremely challenging trading environment. Revenue was inflated by cost recoveries (fuel, wages, tyres).