Increased competition and economic pressures have spawned a cutthroat freight transport industry that relies on kickbacks and rates undercutting to stay ahead of the pack. That was the general consensus among several logistics operators who provided their input to FTW on condition of anonymity. They said that the practice not only brought the integrity of the industry into question but impacted service levels as well. And while large global companies may have stronger corporate governance rules, they are apparently not immune – either as participants or victims. FTW has learned that kickbacks or bribes to obtain contracts include paying for luxury overseas holidays – a family trip to Thailand or a romantic weekend for two at a five-star resort in Zambia. Alternatively, ongoing monthly kickbacks occur, said a business development manager at a large global logistics company. “I have seen situations where a lifestyle audit would probably reveal underhand deals, where a shipping clerk – who earns no more than R20 000 per month and is a single parent to boot – is driving an ultra-luxurious German convertible and living in a high-end home,” he said. According to the anonymous insider, his company has repeatedly offered major savings on transport deals but the clerk remains loyal to the existing agent – at a premium. In another instance, FTW learned that the procurement manager of a large listed company had his preferred transporter pay for a two-week family vacation overseas to ensure a R1.3 million transport contract from South Africa to Zambia involving around 20 truckloads per month. “The transport broker is supplying trucks in line with normal market-related rates but is using a small, inferior haulier that faces challenges like not being able to cope with the transport demand and using unroadworthy vehicles,” said our source. According to him, there have been numerous delays in delivering the product – steel – due to breakdowns in transit. Rates undercutting is allegedly also common practice among major companies and highlevel staff members. A midlevel assistant at a transport brokerage told FTW that his company would receive copies of quotes for a big contract from a major mining company to ensure that the brokerage came in with the lowest quote and would thus win the contract. “The company I work for doesn’t even own trucks but we would win major contracts in favour of big global logistics companies who had refused kickbacks in the past,” he said. He noted that the lower quotes meant using substandard contractors and loads were often lost or damaged, “but there has yet to be any consequence to this”. Other than conducting lifestyle audits on certain staff members, these practices are extremely hard to prove as most deals – such as kickback requests or rates undercutting – are done verbally and it’s a question of “he said vs he said”. One staff member did address this with highestlevel management and his working conditions became so unbearable he had to eventually resign. INSERT A transporter paid for a two-week family vacation overseas to secure a R1.3m contract.
