As South Africa’s logistics costs continue to climb, rethinking distribution networks can deliver significant savings without reducing volumes.

As South Africa’s logistics costs climb to record levels, businesses are under increasing pressure to contain freight expenditure. Yet substantial savings may be possible by changing distribution networks without cutting volumes or negotiating lower transport rates.

This is according to Malcolm Herbert, Financial Director at Sapphire, an integrated business solutions company specialising in procurement, logistics and branded merchandise.

He cites the recently released State of Logistics 2026 report, which states the country’s logistics expenditure is projected to account for 14.6% of GDP this year, with transport alone representing approximately R686 billion, or 59% of the total.

Herbert gives one example of one of its clients, a major South African retailer which made changes to its distribution network, reducing stationery freight costs by 27%.

Sapphire relocated the client’s stationery distribution centre from KwaZulu-Natal to Johannesburg. The intervention reduced freight expenditure by 27% without reducing product volumes.

“This example shows how businesses can achieve meaningful savings by reviewing their supply chain structure rather than focusing exclusively on negotiating lower freight rates,” he explains.

“Many companies focus on negotiating better transport rates without questioning whether their distribution model still makes commercial sense,” says Herbert. “Yet some of the biggest savings come from rethinking where stock is held, how orders are fulfilled and how far goods travel to reach their destination. These are structural changes that can considerably reduce costs without jeopardising service or reducing volumes.”

The potential for savings goes beyond individual businesses. The State of Logistics 2026 report estimates that improvements in transport choices, capacity utilisation and operating efficiency could reduce South Africa’s projected logistics bill by approximately R149 billion. While this represents a national modelling scenario rather than guaranteed savings, it illustrates the financial impact of inefficiencies across the country’s freight system.

For businesses, Herbert says the challenge is that distribution networks established years ago may no longer reflect current customer locations, order volumes or delivery requirements. As a result, companies may incur unnecessary costs via fragmented deliveries, underutilised transport capacity, inefficient stock positioning, and moving goods between multiple warehouses.

“Businesses need to understand the total cost of getting products from suppliers to their final destination,” says Herbert. “Freight rates are only one component. Warehousing, inventory management, delivery frequency and stock availability all influence what a business ultimately spends. Reducing one cost in isolation doesn’t necessarily mean the overall supply chain becomes more efficient.”

He says procurement decisions can also have significant downstream cost implications, particularly when purchasing, warehousing and distribution are managed independently.

“A purchasing decision might deliver a lower unit price but result in higher storage or distribution costs,” he adds. “Unless businesses are looking at these functions collectively, they risk making savings in one area while creating additional expenditure elsewhere.”

With South African businesses continuing to face pressure on operating margins, Herbert believes supply chain efficiency should be treated as a commercial priority rather than simply an operational concern.

“South Africa’s infrastructure constraints and rising logistics costs are challenges businesses cannot resolve on their own, but there are opportunities to improve efficiency inside their existing operations,” he says.

He continues: “The focus should not only be on the cost of moving goods across the country, but also on how businesses can make better use of their existing resources. Even relatively straightforward changes to distribution networks can deliver measurable financial benefits without reducing volumes or compromising service.”