In the second half of
the year, Bidfreight businesses
handling items for the
domestic consumer market
were obviously affected
by the drying up of disposable
household income. Imports
from the East were down
year-on-year. However,
primary products for import
and export were largely
unaffected by interest
rates, inflation and the
credit squeeze.
Though South African GDP growth
eased in the second half of the
year, it remained high in historical
terms at around 4%. Demand for
petroleum products for industry
and the country’s little sign
of abating. This supported high
tank utilisation levels in an
increasingly important part of
our business.
Cyclical factors were also positive
as agricultural volumes raced
ahead for most of the year.
A somewhat softer rand and higher
interest rates were generally
beneficial for freight forwarding
and marine services.
One strategic “positive” that
failed to materialise was the
long-awaited revival of freight
volumes into and out of Africa.
Zimbabwe, once a strong exporter,
remains in limbo. The economies
of several other African countries
seem to be in the early stages
of revival, but cannot provide
the volumes that might make up
for the significant reduction
of import and export activity
by South Africa’s northern neighbour.
Industry factors
The increase in fixed investment
by the South African government
is beneficial as it results in
a continued stream of imported
capital goods and major project
items; for example, machinery
and equipment for Gautrain and
for Eskom’s the expansion of
national infrastructure has not
involved our ports to any great
extent – with the exception of
the Coega project.
Without new berths and with
little expansion in recent years
of facilities at Durban and other
established ports, steadily rising
demand is evident for the limited
warehousing and dry and liquid
bulk capacity.
It is difficult to add to our
facilities footprint at the quayside
until investment strategy rolls
out. Therefore, the accent increasingly
falls on efficiency and throughput
improvements with the facilities
at hand. Congestion and capacity
bottlenecks in and around South
Africa’s harbours enhancing for
Bidfreight as high demand for
storage facilities protects our
margins.
Significant efficiency improvements
were seen with the Durban bulk
exporting operations of Transnet
Freight Rail. This challenged
us to achieve ongoing improvements
in our bulk handling capacity.
The only major negatives relate
to the over-traded nature of
South Africa's distribution industry.
Pressure on margins is ever present.
Bidfreight refuses to operate
at a loss. Contracts were reviewed;
some were renegotiated and some
were lost. This led to the closure
of some smaller facilities.
