Online retail will ‘more than
double’ SA logistics

South Africa’s freight and logistics market is expected to boost the economy by $21.53-billion (R409.7-billion) in 2023, according to a study by Mordor Intelligence (https://www.mordorintelligence.com/industry-reports/south-africa-freight-and-logistics-market).

The study forecasts that online retail sales will more than double that contribution to $46-billion (R875.38-billion) within two years. However, this is dramatically higher than the total expected online retail sales in South Africa. World Wide Worx research showed the total market reached R55-billion in 2022 and is expected to grow by about 25% a year for the next two years.

City Logistics CEO Ryan Gaines says development in the outlying areas, coupled with exponential growth in e-commerce, are significant factors for the country’s booming logistics sector.

“This growth is evident not only in the frequency of truck deliveries, but in warehousing investments required to accommodate the demand,” he says. “The retail sector in particular is seeing a volume growth of 6% year-on-year.”

As a leading privately-owned logistics company in South Africa, City Logistics’ year-on-year growth in the past 12 months is due to higher kilogram volumes for automotive, fast-moving consumer goods (FMCG) and electrical appliance customers.

The April 2022 floods across KwaZulu-Natal meant the province experienced the greatest growth as companies normalised their operations. Cross border truck loads also rose with Namibia, Lesotho and Botswana showing a 10% increase and Eswatini recording 18%.

Gaines says the company has served nearly 1,000 new stores in South Africa during 2023 as existing retailers opened new facilities. Consequently, City Logistics has invested in warehouse facilities in Bloemfontein, Harrismith, Klerksdorp and Polokwane. The company has also acquired a larger facility in Nelspruit, boosting its warehousing capacity by 10%. 

He adds that the industry can anticipate further amalgamations as South Africa prepares to service global giants like Amazon and traditional brick-and-mortar retailers expand their e-commerce platforms and offer more door-to-door deliveries. 

In 2022 City Logistics, in partnership with private equity company Clearwater Capital, purchased the Fastway Couriers franchise in South Africa. The company had acquired the Fastway Cape Town and Durban businesses the previous year. 

The move strengthens its last mile delivery offering, effectively the option for consumers to have packages conveniently delivered to their door rather than travelling to a store or designated pick-up point.

It appears that choosing the right last mile logistics partner is crucial for any business as, by directly affecting the end-user, it is the most imperative aspect of the delivery process. This element of the logistics chain is rapidly gaining importance as the retail industry keeps up with the increasing consumer demand for speedy shipping, specifically in e-commerce.