Workers in the freight transport sector are calling for a 12% pay hike after rejecting a lower offer tabled by employers on Tuesday.
Roads carry 80% of South Africa’s goods. Simply put: when trucks stop, South Africa stops. The looting and violent attacks on road freight logistics vehicles — which occur whenever someone is upset — and the wanton destruction of trucks and goods have begun to undo both the status of South Africa as a safe haven for investment and as an efficient logistics hub for foreign traders.
What started out as sporadic incidents on one or two routes, has become the norm on any and all routes of the total supply chain, and is affecting destinations and originations. With the total supply chain being impacted, the economic effects are far-reaching. While short-term losses run into millions of rands, the long-term impact is incalculable and will be felt long after the burning has stopped and when it is far too late:
- Depending on the category of vehicle, type and value of cargo and specialised equipment required for the cargo, the financial impact can be anywhere between R3-million to R10-million.
- The cost of loss of income through businesses closing is far greater: There are instances where small businesses have lost their only truck or trucks. This means loss of earnings/revenue for the business, loss of salaries paid to staff who would no longer have jobs (due to business shutdown) and loss of revenue through the services and support the business uses (for example, fuel, storage, maintenance, tolls, staff requirements, licencing, etc).
- Potential closure of businesses means fewer transporters available to perform work. Some companies might feel the industry is not a safe or secure environment and so their owners could decide to close their business.
- Freight travelling routes through South African ports — especially the Port of Natal and along the corridors — have been targetted. Cargo owners and customers will choose to move cargo through neighbouring countries. This has already been happening as South African ports become inefficient and the surrounding ports develop, improve and drive efficiencies up. South Africa’s “Gateway to Africa” status has been lost and these attacks will further cement the move of transit freight from South Africa to neighbouring countries. Port revenues will drop, as will income through all support and related freight logistics users.
- Costs relating to insurance will increase as the risk to insurers has increased over the past four years, partly as a result of the constant attacks on freight. The evidence is clear that road freight is attacked as it is an easy target and the looting prospects are huge in terms of the quantity and the variety of goods that can be looted.
- Security costs will increase as logistics companies are forced to employ guarding services. Routing will change to safer (but perhaps far longer) routes, where control is easier.
The consumer will foot the bill for what has happened — through indirect charges relating to the cost of logistics and as risk appetite softens and insurers demand more for premiums. Supply and demand will dictate the cost.
What cost are we looking at? The cost to operational assets is just the tip of the iceberg — and as reports come in, this may very well grow; however, the cost to the South African economy will run into billions of rand lost as business confidence from foreign investors plummets, and those who use South Africa as a transit hub, turn away from us and move to other countries that are safer and more efficient.
The Road Freight Association reiterates its call to President Cyril Ramaphosa to ensure that common violence is dealt with. The level of opportunistic crime is far too high — it needs to be dealt with. Now. Time and again the association has called for the rule of law to be shown to be firmly in place and that the safety and security of South Africa and its people be ensured. The government needs to act swiftly and decisively to bring an end to this senseless destruction of the road freight sector.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the Mail & Guardian.