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Business: Freight Industry Under Pressure

 





Recent Gauteng Business News

The main issues facing South Africas freight industry are economic, operational and environmental issues.

Economic

Economic issues such as the rising fuel price, the weakening rand, and increasing interest rates, are all adding pressure to the industry. The soaring fuel price on an industry that relies on truck transport is having a devastating impact.

Interest on financing trucks is another negative. The slowdown in consumer spending could mean less demand, and therefore a drop in freight volume. A slowdown will be felt, but this will increase as demand increases for 2010.

BEE compliance for freight companies is also playing a part. Freight forwarders that are not BEE compliant will not be used by organisations whose suppliers need to be BEE complaint. In such a specialised industry, becoming BEE compliant is proving difficult. However skills training and development of PDIs is becoming the norm with most freight forwarders.

Environmental

Environmetal issues such as lack of truck drivers, and overloading of trucks is a problem. Poorly maintained trucks and drugging drivers to keep them awake is another serious issue.

Long haul truck drivers do not get enough sleep. The estimated sleeping time for a truck driver is four hours per night. Drivers spend in excess of 10 hours on the road per day, which is not an acceptable labour practice

Fatigue leads to accidents, a further economic burden. Trucking rest-points in South Africa are not of a good quality, although the industry is working to improve them. At major trucking stops, HIV counseling and medication is now available.

It takes about a year to train a truck driver who drives millions of rands of goods, and HIV is threatening the industry. This again is another expense for the economy, losing its skilled workers and coping with HIV care.

The average age of a truck driver is 37 and on average, a driver is employed for eight years. The HIV prevalence in truck drivers is over 56%. This is because about 73% of truck drivers are involved with sex workers along their trucking routes.

Hijackings are another significant contributor to operations. It is no longer enough to track only the vehicles. Now, the freight industry is having to find ways to track its cargo as well. Hijackings are causing huge losses to the economy and putting truck drivers at risk. Hijackings are also placing a strain on policing resources and affecting insurance premiums.

Operational

SARS on the customs side have lost expertise. This is a specialised field and Johannesburg customs is proving to be problematic. Officials examining imported goods must be familiar with the laws for those specific goods. Imports can be delayed for up to five days before being released, especially for example at the state vet, where medicines are imported for livestock.

Overall, the freight industry is not booming, but leveling out. It is not in a downturn. It will be interesting to see whether the continued price increase in fuel will move freight transport from road to rail.

The Coface Group

Founded in 1946, Coface, rated AA+ by Fitch Ratings, AA by S&P and Aa3 by Moody?s, is a subsidiary of Natixis whose share capital (Tier 1) was 9.9 billion euros end 2005 (pro forma data). Cofaces mission is to facilitate global business-to-business trade by offering its clients four product lines to fully or partly outsource trade relationship management and to finance and protect their receivables: credit insurance, company information and ratings, receivables management and factoring. Coface also offers three other business lines: guarantee insurance, receivables management training, and, in France, management of government export guarantees. Coface operates a quality local service for its 85,000 clients thanks to its 4,850 staff in 60 countries where Coface has a direct presence. This local service also covers in 93 countries via partners in the CreditAlliance worldwide network, organised around an integrated credit risk management tool, the Common Risk System.


Sha-Izwe

Sha-Izwe Communications (Incorporating Charles Smith & Associates established in 1987) is a BEE company. Sha-Izwe is the sole representative for The Constellation Group in Gauteng , South Africa. Services cover media relations, graphic design, advertising, investor relations and writing of tender documents and manuals.


 
 
 
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