 Could the supply chain chaos be a blessing for manufacturers and warehouses locally? If you are a business owner and are looking for ways to rebuild post the COVID-19 pandemic, stay tuned for more insights because we are here for you. This is the Private Property Podcast. My name is Dummi. Let's unpack. Congratulations to our winner for Happiness Malulege for walking away with 500 grand cash. Thank you so much Happiness for engaging with us. You can also shoot your shot and share this post and tag your friends. The person with the most shares walks away with 500 grand cash. Before we get started, let me tell you Tully's story to help you understand a little bit more about stock warehousing and manufacturing. Tully is a 27-year-old entrepreneur who owns a spazzer shop and a hair salon on the outskirts of Johannesburg. Before the COVID-19 outbreak, she had at least six workers in her businesses. Most of her clients were referrals and family members. In the wake of the pandemic, Tully's business suffered due to suspicion that she was not following the COVID-19 protocol. Customers were hesitant to buy from her or even come to her salon. Before COVID, I would have more than 10 clients, but with COVID, I only have three, she said. Tully's salon and spazzer have suffered. She couldn't pay the rent since she had no profit, and as a result, her food and stock spoiled. Tully was on the verge of losing both her businesses. I have lost nothing less than everything she added. Tully realized that she was losing a lot of money and needed an immediate solution. That is when she changed her strategy to maintain and attract more customers. She rebranded her hair salon, and additionally, she grew her own fruits and vegetables rather than relying on wholesalers from fresh food produce. Thanks to her effort and adaptability, her businesses grew despite the chaos caused by the pandemic. So be like Tully and adapt and overcome because that is the only way you are going to be able to survive post COVID-19. Today's guest exemplifies hard work in your 20s that will surely pay off in your 30s. He holds a degree from the University of Cape Town and has founded and managed one of the country's most successful auction companies. In his 20s, he founded the Levco property group, and through this, he has made his way to becoming the CEO of the Alliance Group. Ladies and gentlemen, please let's extend a warm welcome to Real Livet. Real, good evening and thank you so much for joining us. It's hard to me, good evening, and yeah, it's good to speak to you from Cape Town. Thank you so much. We really appreciate the time. Before we get into the conversation tonight, we are talking supply chain tonight and the chaos that's currently happening because of all of these things that are happening in the market. Let's talk exactly what it means for someone who's sitting at home who is a business owner and how this can either be an opportunity or even a threat to their businesses. Yes, I mean, so, you know, when you talk about the word supply chain, it really means how goods are getting from manufacturers and other suppliers who don't necessarily need to manufacture. They could be assembling. They could be just delivering goods to the consumer, and that's really its supply chain and there's a whole lot of steps in between. So whether goods are made here in Africa onshore, whether they're made in China or other places in the world, it's really to get those goods into the consumer's hands. And, you know, when we talk about supply chain chaos, what's really been happening in the world and it did start off with the COVID pandemic is that ships have become full. It's been difficult to get goods to consumers, and that has really started pushing our prices and causing it to become very difficult for consumers to get certain goods. And you and I are going to start noticing it because we arrive and we can't find certain parts and we can't find different things. And it's really because of all the chaos which has happened. And of course, the recent war in Ukraine just fueled the supply chain chaos. And you know, our topic tonight is talking about how this chaos can either be a blessing rather for the local manufacturers and the local warehouses. So talk to us a little bit about that in terms of it having a possibility of being a great opportunity for them. So I do want to split the two issues because there's manufacture, which is really the production of goods locally. And then there is the warehousing of goods. So I'm going to deal with the warehousing first. And what really happened on a sort of practical level is that during the COVID pandemic, obviously it affected the ability for people to go out to shopping centers or to shops and to buy goods. But it's not that people stopped consuming. Consumers didn't stop eating. It was just how food got to them. So of course, you know, we have the rise and we have the eats. We have the rise in groceries being delivered to people's homes and warehousing really started getting boosted by that and it wasn't only in Africa, but it was globally. So what started happening is that the people needed to get goods, but they couldn't go out to their local stores and their local retailers to get it. And so they simply got things delivered to their homes or delivered to their businesses. And in a space where we own and manage the moment, we own and manage by 45 different parks in Johannesburg and in Cape Town, you know, like the rest of the world, we got into a bit of a panic because we thought, oh, you know, this is where we all did in that first few weeks of COVID. And then all of a sudden we started noticing that it was demand for warehouses. Why? Because warehouses are actually cheaper than retail stores. And all of a sudden people getting food delivered and this presented opportunity for different companies, you know, up at, you know, many different examples. For example, if you're running a restaurant to run an expensive retail operation with chairs or tables or cooking utensils with big red is quite costy. But people were starting to actually make goods. Many people started making goods in small warehouses. Some people even did it from their garages, as an example, and that could be delivered by Uber Eats. So while, while, while things are not only Uber Eats, there were other forms of delivery. So that started presenting an opportunity for warehouse owners. Now we saw that here in South Africa, but in fact, it was a global trend. And a global trend was that all of a sudden warehousing distribution started getting bigger and bigger. And you can see it in any South African cities, in big warehouses being built. And that starts affecting and increasing the demand for warehouse space. But it wasn't only for large companies, it was actually for smaller companies. And many small companies started sitting in the gap and said, but hold on a second. Can I provide, can I start cooking from small, quite relatively inexpensive warehouses and delivering it straight to the consumer? You know, I always say to people, if you're having a bad day, come look at inner space. You know, we've got over 1200 businesses, smaller South African businesses, who do a range of different things. But, you know, right across the board from creating supplies, providing food, clothing, etc. So that's where there was an opportunity, both for those people who own warehouses, but also for companies that could provide straight directly to the consumer. And, you know, I often say, even if you look at Uber Eats, and you have a little bit more in Cape Town than in Johannesburg, but you will see businesses there and you go look online and you say, well, that restaurant actually isn't a traditional restaurant. It really creates an opportunity for somebody to set up a restaurant at a far cheaper basis than what it would to go set up a full restaurant with all the expensive equipment, which would be the consumer facing goods. Now, manufacturing is a different story because we know that we can, you know, to supply, for example, food, you don't necessarily have to be manufacturing it locally. But what's not happening with all the supply chain chaos, a lot of companies starting with the larger companies, but hold on a second, if we can't get goods in from China, it's becoming more and more expensive. So if you take, for example, you're looking at the photo behind me, and obviously that's taken during the day, that's Cape Town Port. And the port started getting so congested and the cost to bring containers in from overseas, whether it's China or India, wherever else in Africa, would be importing from. It has grown literally since 2019. The cost to bring in a container has gone up four to five times since 2019, sort of pre-pandemic years. So a lot of companies started asking, and if I remember correctly, truers were the first by the big group, so I was saying, but hold on a second, the cost of bringing goods is so expensive, not only is it expensive, but it's becoming a bit unreliable, we're not quite sure if we can get goods into the country. Possibly it would be cheaper to manufacture locally. And the Department of Trade and Industries has been actually assisting companies in growing, on-shoring, but actually just putting up really putting tariffs up for import. So it now becomes cheaper to make goods here in South Africa. Now, it can be large companies who are doing it, but it also can be small. And so all of a sudden we started seeing, and when you've started noticing at inner space, we started noticing a lot more local manufacture, a lot more companies producing goods. And of course that has been a boost for manufacturing. So while COVID was very negative for large parts of the economy, the sort of saw the lining has been in this ability to warehouse locally and then to start manufacturing locally. No, definitely. Thank you so much for that. And my next question is specifically around where we currently are. You spoke about how the Russian war in Ukraine has globally really affected supply chains and how things have changed post these, and not really post them because some of these things are still going on. It looks like this is the new normal as it's been said. So I just want you to take us through where we currently are in the market and where we are foreseeably going in the next two to three years in terms of access to these things and the growth of those warehouses that are now locally and the different outlets that are now manufacturing things locally. Are we starting to see more of that? Is it something that's going to come up in the next couple of years and where we currently are in the market? Well, I think, I mean to me, I think the real issue actually is maybe we even need to go step a little bit earlier than COVID and the Ukrainian war, which I'll talk about in a moment and how that really has just created further supply chain disruption. One of the big things that have changed supply chain disruption actually has been China, which has been very harsh in their lockdown. And if you look at the rest of the world in many ways, it's sort of gone with it. Almost COVID really has been, in many ways, it's actually sort of unclear that many countries hasn't disappeared. It's still a material risk, but countries have gone on with it, including here in South Africa. But in China, they recently locked down in Shanghai. And when they locked down, that means that they're manufacturing locked down. But taking us back prior to COVID, I think the real great disruptor and to answer your question and the disruption which has happened has been technology. And what technology as an e-commerce has really allowed to happen is that goods no longer have to go to a shopping center or to a bigger retail store. It can get to the consumer in different ways. And that has been e-commerce. And so to answer your question, I mean, while the crystal ball is always unclear because if you look at this war in Ukraine and you're looking at COVID itself, it came out of the blue. We wouldn't have guessed it. But the trend has been globally that e-commerce has changed the way people buy things. And the way people buy things is straight, is actually cutting out several steps in the supply chain, which is really going to retail stores and taking goods straight to your home. So for example, if I asked you, how would you buy a television set today? If I'd asked you this question 10 years ago, you know the answer. You would have gotten your car, you'd have gone to look at one of the big retail stores, you would have compared prices. But today, you literally go on your phone and within one click, you can order it and it'll be delivered to your home. So the trend has really has been for more and more warehouse and for more and more goods to get to the consumer. And here in South Africa, and when it goes to drive around the cities, we look around and we start seeing companies which didn't even exist 10 years ago, which are occupying large spaces. Companies like, for example, take a lot of, you know, taking more and more space because they're getting goods to consumers. Many of these sort of, what they call ghost kitchens which are dark kitchens which are held in warehouses. And then, you know, other companies, I mean, a good example is We Buy Cars. I mean, We Buy Cars is a huge user of big warehousing space. So the trend is certainly in this direction and the view is both here and globally, the view is that will continue. We're still early on the journey on real e-commerce transactions and that means the trend is good for warehousing. Now, the question is really, is that trend good for local manufacture? Now, the fact is that we live in a world where as you said, it is the new norm. So maybe the new normal is disruption. And I mean, it's a possibility that things will settle down in terms of the supply chain because businesses have a wonderful way of actually really evolving and sorting it out. But the view actually is that throughout the world that waiting for ships from another country actually is an unreliable way. And so therefore in countries that can do it, that certainly means that what they call on-shoring has become a big trend in many countries. And it will, and it has been a trend in South Africa which is a great sign. And if you take a city like Cape Town and, you know, to be too young to remember, but Cape Town was a huge producer of clothing. Now, people used to, well, you know, it wasn't the producer of clothing. But the fact is that all of a sudden, we see now the larger companies and larger companies trigger smaller companies as well suddenly starting to produce locally. And that's a great boost for employment to something between the support and it certainly appears to become the trend. And, you know, obviously we live in a macro environment where there are other factors which affect South Africa. The general economy power is probably one of the largest threats because without power we can't manufacture. But certainly the trend is good and the trend is for warehousing and the trend is good for hopefully a lot more on-shoring of manufacture. Thank you so much for that, Daryl. I'm very good and well-rounded conversation that we had there tonight. And thank you so much for joining us tonight. We really appreciate you taking our time, you know, to educate a lot of business owners who might be watching this tonight. Thank you so much and enjoy your evening. Yeah, thank you. Thank you. And thank you to you also for engaging with us and staying till the end of the show that I'm about to now announce the winner of that 500 grand cash prize. And I would like a little drum roll, please. You know, as usual as how we do it because we wanna celebrate with them. And the winner tonight is Shantay Evans Santor. Hope I got that right. Thank you so much for engaging with us and sharing and sharing and sharing. We really appreciate the love. And remember, a healthy dose of property information might just be what you need to get you back on your A game. Please don't forget to like, share and follow us on all our social media platforms. This is the Private Property Podcast. My name is Dumi. Have a great night.