Logistics - A strategic resource
Within South Africa “Logistics is a strategic resource for the economy and key to providing a global competitive advantage. Logistics costs make up just over half of the landed cost of agriculture, mining and manufactured goods.” (Logistics Barometer 2017 - Stellenbosch University).
Logistics costs are broken down into four key components namely, transport, warehousing, inventory carrying costs and management and administration. Transport is by far the largest cost in the supply chain with inventory carrying costs competing for second place. Volatility in the fuel price has a profound impact on transport costs and we have seen significant fuel price increases over the last 6 months.
South Africa’s continued electricity price increases have impacted warehousing costs significantly. The direct impact of electricity price hikes is evident across the board, but especially in refrigerated and highly automated warehouses. Load shedding disrupts operations indirectly. This necessitates a number of mitigating actions such as additional labour to compensate for lost time or installation and maintenance of uninterrupted power supply – all incurring additional costs. The gravity of ongoing electricity and labour concerns could edge warehousing costs into the limelight previously dominated by inventory carrying cost and transport alone.
The importance of this is that the design and location of warehousing will become a key focus. In the Southern Basin of Durban where there is a critical shortage of land to develop warehousing, one development stands out and that is Clairwood Logistics Park.
The Park is being developed to accommodate state of the art warehousing with attention to natural lighting, height for maximum racking and stacking, space for optimal truck staging and most importantly, proximity to the Port.
Currently there is a 23 000sqm warehouse being completed and ready for occupation in October 2018. If your business needs to gain the cost efficiencies from state of the art warehousing, please contact me at ryan@dealcore.co.za