Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering Transport Technology
A.A.W.J. Verdult The South African automotive industry and its cargo flows. Literature survey, Report 2005.TL.6934, Transport Engineering and Logistics.
South Africa is one of the fastest growing countries on the African continent. After the apartheid disappeared, the vulnerable economy started to grow. High import taxes on new automobiles have lead to an automotive industry that made cars mostly for domestic sales. These taxes are decreasing because of the government's policy to fulfil the WTO demands for fair world trade. The government agreed at a development program for the automotive industry that included decreasing import tariffs for cars and components. At the same time, carmakers are changing their production lines. Ten years ago, almost every car manufacturer had several models in production that came by ship in CKD packs. At this moment carmakers are tending to change their lines for the production of one model. The scale advantages are obvious. Parts can come in packed in containers with a good loading degree and components can be made in larges series which improves the possibility for domestic suppliers.
Eight car manufactures are working in SA. The large German brands are active like BMW, Daimler Chrysler and Volkswagen. General Motors and Ford Motor Company represent the US and the Japanese have Toyota and Nissan plants there. Only Fiat makes models but has no own plant and therefore uses the Nissan plant in Rosslyn. The export of cars in SA is almost twice as large as the import. Nevertheless, most of the manufactured cars are for domestic sales.
For a car like the Merc C-class 10.000 components are needed. This gives an idea how diverse and large the components flows are. Part by part distribution is the most efficient way to transport certain goods but often is chosen for CKD (Completely Knocked Down) or SKD (Semi Knocked Down) kits. Depending on the level of knocking down, the kits are transported on special racks that are fitting in a container. The racks are going back and the empty containers can be used for car transports. Cars are latched on racks and loaded into a container which can contain 3 or 4 cars when it is a 40' ISO container.
The decision makers for the transport of cars and components are different depending on the level in the supply network. Low in the network, the level of the casting factories and the semifinished products, most decisions are made by these tier 2, -3 and 4 suppliers. They are arranging the transports to their customers mostly themselves. Tier 1 suppliers (delivering to the car plants) often choose for own transport or they hire large logistic suppliers. They have to deal with large production series and often more than one different component. Carmakers have a lot of influence themselves and control the demands of transporting. If their transport division (which is handling the company flows) decides to outsource certain transport flows, large logistic companies are coming to deal with it. They arrange the transport of components to places all over the world. The car manufacturers only have to do a quality check it before it can leave.
Because most the transport of components takes place in containers no special demands for transports are needed. Like for the transportation of every other good, a good infrastructure and large hubs are needed for cross docking possibilities. An estimated component flow of 85.000 TEU is leaving Germany with destination South Africa. This mostly is done by the Hamburg and Bremerhaven ports. The imported flows from SA are very small in terms of weight but are tending to increase slowly.
When a growth of 5% is assumed, South Africa will make over 570.000 vehicles in 2015. This will lead to a transport flow of 138.500 TEU from Germany to SA in the same year, when mayor strategic carmakers decisions are neglected. Although it isn't of importance The South African automotive industry and its cargo flows globally, it is a significant cargo flow for all ports involved. Rotterdam will notice the effect of the Betuwelijn when South German factories and especially suppliers can save on transportation costs by going through Rotterdam instead of Northern Germany. The main flow of the exports though will go through the North German ports because of the large logistic facilities which are already available there. Factories in Belgium and Northern France will take ports close by for their containerised cargo.
Summarized, the South African automotive industry has a good future. A huge potential of labour will keep the wages on a acceptable level and the growing economy will continually rise the car sales. Stimulations to increase exports of cars will also have their effects making its industry growing more than the economic average of 3%. This makes the SA car industry steady but certainly not booming like in China and the transport flows of components significant enough for a lot of ports. For Rotterdam, it will be recommended to focus on automotive supplier flows to and from South Germany instead of the flows coming from the car plants.
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