Opinion: Logistics changes our Economy - Good and Bad

The business of logistics has to be as efficient as possible, but with too much cost-focus how effective is it?


I had a thought today that made me feel we South Africans have lost our way. And our Logistics Industry is helping to do it.

Where have all the fresh produce markets gone? Those colourful, scented, vibrant stalls strewn with vegetables, meats, cheeses, fruits, fish…. You know, real stuff that looks like it came from the ground or out the sea. Produce from a field just down the road still with earth on it. Markets near major cities, not just rural centres with food tasting like the country-side not the hypermarket...

Maybe it’s the Food Channel. Scenes of famous chef’s creations interspersed with local euro-city market trips and remarks that best taste needs the freshest ingredients. And they don’t mean a supermarket trip to get plastic packed tomatoes and chicken with the longest use-by date.

We’ve lost the plot. Most of us live in cities, we either use hawkers or want everything prepped and delivered, or easy to gather with a shopping trolley. We rely on the logistics industry to cluster then hub-and-spoke bulk produce to our local retailer. Europe lives in cities like Rome, Berlin, Paris - all with 3 million people (the same as Johannesburg and Cape Town). They have retail chains but also have thousands of fresh produce markets, mid-city as well as informal rural.

In our Rainbow Nation bulging with unemployed but rural-skilled people, keen or desperate to eke out a living, surely we can foster micro businesses around food production. Instead we corporatize every aspect of supply chains creating sky-high participation barriers to sustainable micro enterprise - sized between hawking on a street corner and owning a shop.

Feeding the country via fresh produce markets - a growing complementary channel to the mainstream - needs, specialization, basic skill, space and funding. Use the 14-year-stalled farm workers land ownership plan (the Labour Tenant Act) to provide the growing / selling space. Funds will be required to transfer knowledge and coach small farms or cooperatives to work to appropriate standards. This is going back to the roots of business, the place to start in a country burdened with challenges of poor education, ineffective government execution of grand plans and a surplus of Historically-Advantaged people wanting to help.

The benefits are worthwhile but not always EVA-based (Economic Value Added). Employment in a semi-informal food sector; introduction of local foods; a breeding ground for single or small cooperative entrepreneurs; reduced need for survival-crime, and even tourism value - a place to go for interesting food. Current markets focus on African Art (mostly from outside South Africa), and crafts which don’t attract food consumers.

And what about logistics? Local fresh produce has higher input costs, and needs a small truck to get to market. But much of the food we eat via the Big5 retailers absorbs at least 15% cost travelling thousands of kilometers in a chilled super-link. Then a significant proportion is left to waste because too much was moved in the first place.

Oh and what about the Big5 retailers’ shareholder expectations. Returns based on EVA. To the layman this is the excess profit after deducting all costs of running the business (not just operating but also raising finance). Yes the local market supply chain is expensive - but is small local any more expensive that the corporate retail market?

Perhaps we need to think Emotional Value Added. Small business brings opportunity, needs passion, delivers personal customer service and can build a nation - we need to consider the whole environment business exists in not just the money.

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Contributed by: Doug Hunter, Product Services Manager, Syspro Africa