Professor Zane Simpson, Director at GAIN Group, Professor Jan Havenga, Director at GAIN Group & Justin Schmidt, Sector Executive for Transport and Logistics at Absa Business Banking
South Africa has good reason to be concerned about what it costs to move goods through its economy. This is a country whose geography and economic structure make transporting freight an expensive undertaking even under favourable conditions, with vast distances separating much of what it produces from the markets it serves. Then there is the expense South Africa has learned to live with: the additional cost of a logistics system that fails to perform as it should, so thoroughly absorbed into the ordinary business of moving goods that it is easy to lose sight of how much the economy is paying for it.
There is considerable room to bring these costs down, but doing so will require a more deliberate approach to how the country moves its freight, especially in the choices made between road and rail and how productively the capacity of each is put to use.
According to The State of Logistics 2026 for South Africa report, produced by GAIN Group and sponsored by Absa Business Banking and the Western Cape Government Mobility Department, the country’s national logistics bill is projected to reach R1.156 trillion in 2026, up from an estimated R1.009 trillion in 2025 and R972 billion in 2024. This expenditure, which covers the movement, storage and management of freight across the economy, is forecast to rise from 13.2% of GDP in 2025 to 14.6% in 2026, the highest proportion recorded since the current measurement series began in 2003.
Transport accounts for almost six out of every ten rand spent on logistics, with the remainder going towards warehousing, the cost of carrying inventory, and the management and administration of freight operations. It is also responsible for much of the recent escalation. Having risen from approximately R101 billion in 2003, transport expenditure is forecast to reach R683 billion in 2026, with R117 billion of that increase occurring between 2025 and 2026 alone. That accounts for almost 80% of the projected R147 billion rise in the country’s total logistics bill over the year, driven in part by substantial increases in fuel prices. The other components are hardly insignificant, particularly the cost of carrying inventory, which is expected to reach R191.4 billion in 2026, followed by warehousing at R151.7 billion and management and administration at R130 billion.
Yet what is striking about the composition of South Africa’s logistics expenditure is how little it has changed over three decades: transport accounted for 56% of the total logistics bill in 1996 and 56.1% in 2025.
Much of the attention paid to rising transport expenses tends to settle on fuel prices, understandably so given how sharply fluctuations in diesel prices can affect operators. But the figures suggest that this preoccupation has obscured the extent to which almost every other component of road freight expenditure has become more expensive, particularly the cost of financing vehicles and equipment in a country heavily reliant on imported assets and relatively expensive capital.
The persistence of transport’s share of national logistics expenditure over thirty years also raises uncomfortable questions about how much progress South Africa has made in addressing the inefficiencies built into its freight system. There is little to be gained from concentrating exclusively on whichever operating expense happens to be rising most sharply when the underlying challenge is to improve the economics of moving freight altogether. That requires attention to what businesses can do to reduce unnecessary expenditure, alongside efforts to grow the economy itself, because the national logistics cost burden is ultimately determined by the relationship between what the country spends on moving goods and the economic output that expenditure supports.
It would be unfair, of course, to overlook the progress that has been made in addressing some of these problems.
Considerable work has gone into reforming the country’s freight system, from the introduction of new rail policy and the establishment of the National Logistics Crisis Committee to opening the rail network to private operators, while the gradual recovery in rail volumes is beginning to offer some evidence of improvement.
The opportunity now is to build on those gains by making more deliberate choices about which freight belongs on which mode of transport, because there is considerable expense in moving goods by road when rail could perform the same task more economically. Long-distance, high-volume freight is an obvious candidate for rail where the service is sufficiently reliable, leaving road transport to serve the markets and distribution activities for which it is better suited. Getting that balance right will also depend on how effectively the two modes work together, with inland terminals, consolidation hubs and freight villages helping to connect production centres to the wider transport network and, where appropriately located, reduce unnecessary transport distances.
But shifting freight onto rail will achieve little if the service cannot meet the needs of the businesses using it, which is why the reforms underway must translate into dependable operations and sufficient capacity. The same principle applies to the use of existing road infrastructure and vehicle fleets, where better loading, more effective scheduling and arrangements that reduce empty return journeys can allow operators to move the same volumes with fewer trips. There are further savings to be made in how economically those journeys are performed, through improved maintenance and fleet management, while rail’s own efficiency will depend on the condition of its infrastructure and the ability of multiple operators to work reliably across a shared network.
Government has an equally important role to play, from planning rail capacity alongside intermodal terminals, port access and first- and last-mile connections, to aligning land-use planning with the location of warehouses and distribution centres to reduce freight distances and allow for greater consolidation. This must be supported by proper road maintenance, improved rural access and consistent enforcement of loading limits.
With freight moving on the most economically appropriate mode, transport capacity used more productively and operations running more efficiently, South Africa could reduce its national logistics costs by an estimated R149.3 billion in 2026, and by approximately R668 billion over the five years from 2022 – under the improved-logistics scenario modelled in the report. Even with these savings, however, logistics expenditure would continue to rise relative to GDP, reinforcing the need for improvements in freight performance to be accompanied by stronger economic growth.
The task now falls to government, infrastructure managers, road and rail operators and freight owners to work together to build on the progress already made and turn these possibilities into measurable gains. South Africa has laid much of the groundwork for a better functioning freight system, and the opportunity now is to ensure that every improvement in how goods move translates into greater economic value for the country.
