In South Africa this is a critical issue as noted in a 2018 report:
The competitiveness of the South African economy is hampered by high freight logistics costs, amounting to R393 billion or 11.1% of gross domestic product (GDP) in 2013, while freight logistics costs as a percentage of transportable GDP breached 50% since 2012 (refer Havenga 2015, for methodology, and Stellenbosch University 2015, for data update). The ratio of South Africa’s freight logistics costs relative to the country’s GDP is higher than the same ratio in developed countries; for example, the ratios of North America and Europe are 8.2% and 9.2%, respectively… South Africa’s high freight logistics costs can be linked inter alia to the disproportionate transport demand relative to the size of the economy owing to inland mining activity and related industrial development far from coastal ports (Havenga & Pienaar 2012a). An added challenge, however, is the modal imbalance between road and rail owing to rail’s investment backlog of the past two decades and limited road–rail collaboration (Havenga 2015). (Emphasis added)
Freight costs of 50% of transportable GDP means that on the average, there is a 50% tax on all goods produced in or imported to South Africa (this would exclude the services component of GDP).
As reported by Vilakazi, high logistics cost also plagues international trade throughout Southern Africa, often caused by border delays:
Each route is affected by border delays arising from the government administrative processes or incomplete information from the customer or broker. There have been significant improvements, however. For example, the introduction of a one-stop border post (OSBP) at Chirundu (between Zambia and Zimbabwe) has continued to increase efficiencies since 2009 and has had a downward effect on rates (Curtis, 2009; TradeMark, undated). The effective implementation of pre-clearance of goods has been an important contributor particularly because sealed, pre-cleared loads are able to proceed through the border with minimal inspection delays. Freight companies with good IT systems and forwarding capabilities are able to use pre-clearance to their advantage. On the other hand, the expected transit time through Beitbridge (between South Africa and Zimbabwe) is two days (Curtis, 2014), partly because goods are effectively required to be cleared on the Zimbabwean and South African side. Other main constraints identified through the interviews are as follows:
Clearance systems between South Africa, Zambia and Zimbabwe do not interoperate and do not have connectivity with one another, although it is apparently technically possible to do so. Bottlenecks also arise when leaving the SACU (Southern African Customs Union) countries due to the use of different electronic systems, tariff structures and coding of certain products for tax and duty purposes.
Zambia does not give preference to transporters of time-sensitive goods although we understand that this is to be addressed.
Some border gates, such as Chirundu (between Zambia and Zimbabwe) do not operate on a 24-hour basis which implies queues and parking fees even for time-sensitive refrigerated transport. Authorities are apparently working towards extending hours gradually.
Byiers & Vanheukelom (2014) found that delays at border crossings can cost up to $300 a day for an 8-axle truck. In 2015, delays at the border were estimated by transporters to cost at least $400 a day or $13/ton. This provides a useful benchmark for understanding the costs incurred by a truck operator including additional driver time, petty cash, parking fees and the opportunity costs of servicing less clients due to longer roundtrips. For reefers, there are additional refrigeration costs incurred and possible obsolescence of goods.
Removing the impact of the typical delay of two days on the one-way rate charged from Johannesburg to Lusaka of $3660 or $122/ton (Table 1) could have a large impact, other things equal. Based on $26/ton for two days’ delay the rate could decrease to $96/ton ($0.06 per tkm) which is a 21% difference and closer to the efficient benchmarks identified.
RailRunner bimodal addresses these cost drivers through
- Fuel savings – consuming 35% less fuel per payload
- Secure border crossing – avoiding long customs and immigration queues at highway border crossings
- Substituting one locomotive and train crew for 40 or more highway horses and drivers
- Avoiding cargo shrinkage with RailRunner’s high security transport