The role of transport costs and logistics in South Africa's international competitiveness

Abstract

International competitiveness is a requirement for a country to attain high economic growth rates. It is also a precondition to benefit from the globalisation of the world economy. Improving competitiveness can raise a country's exports, which are frequently seen as a "growth engine" for an economy. South Africa is currently facing increasing global competition because of the trade Iiberalisations. The success of domestic firms depends on whether they can increase their international competitiveness. In this study, the role of transport costs and logistics in South Africa's competitiveness is investigated. It was established that transport infrastructure and the cost of transport plays a significant role in the cost of trade, as a result of different geographical locations of places and countries. In the case of South Africa, where high transport costs are assumed to lead to higher input prices and decreased competitiveness, national as well as international transport costs are investigated. The findings resulted in the conclusion that although insufficient transport infrastructure and insufficient maintenance of existing transport infrastructure are the cause of higher national transport costs and thus higher production costs, they are not the most significant contributors to the uncompetitiveness of South African export products. High harbour taxes (unique to South Africa), in addition to terminal handling costs as well as insufficient handling of goods at harbours, was identified to be the main obstacles from a transport and logistical perspective to South African exports. Irrespective of the transport cost problem, it was also found that insufficient logistical management plays a significant negative part in the competitiveness of South African products. The South African logistical 'management system, of which the management and handling of transport forms a part, compares very unfavourable to other countries. This indicated the infant stage in which the ,South African logistical system is at the moment. An accelerated improvement of the logistical systems of companies is essential for the improvement of their products' competitiveness in international markets.