Page 7 - Logistics News May 2016

informal markets

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 really?

By Doug Hunter, doug.hunter@mweb.co.za

I had a thought today that made me feel we South Africans need for survival-crime; and even tourism value – a place
have lost our way. And our logistics industry is helping to to go for interesting food. Current markets focus on African
do it. art (mostly from outside South Africa), and crafts that don’t
attract food consumers.
Where have all the fresh produce markets gone? Those
colourful, scented, vibrant stalls strewn with vegetables, And what about logistics? Local fresh produce has
meats, cheeses, fruits, fish … you know, real stuff that higher input costs, and needs a small truck to reach
looks like it has just come from the ground or out the sea, the market. But much of the food we eat via the Big5
produce from a field just down the road still with earth retailers absorbs at least 15% cost, travelling thousands
on it. Markets near major cities, not just rural centres of kilometres in a chilled super-link. Then a significant
with food tasting like the country-side not the sterile proportion is left to waste because too much was moved
hypermarket ... in the first place.

Maybe it’s the Food Channel. Scenes of famous chef’s Oh, and what about the Big5 retailers’ shareholder
creations interspersed with local euro-city market trips and expectations. Returns based on EVA. To the layman this is
remarks that best taste needs the freshest ingredients. And the excess profit after deducting all costs of running the
they don’t mean a supermarket trip to get plastic packed business (not just operating but also raising finance). Yes
tomatoes and chicken with the longest use-by date. the local market supply chain is expensive – but is small-
local any more expensive that the corporate retail market?
We’ve lost the plot. Most of us live in cities, we either
use hawkers or want everything prepped and delivered, Perhaps we need to re-think EVA as Emotional Value
or easy to gather with a shopping trolley. We rely on the Added. Small business brings opportunity, needs passion,
logistics industry to cluster, then hub-and-spoke bulk delivers personal customer service and can build a nation
produce to our local retailer. Europe lives in cities like – we need to consider that whole environment business
Rome, Berlin, Paris – all with 3-million people (the same exists in not just the money. •
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 corporatise 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 specialisation, basic skills, space and funding.
Funds will be required to transfer knowledge and coach
small farms or co-operatives 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 co-operative entrepreneurs; reduced

10 May 2016 • Logistics News