The impact of current oil price fluctuations on the local transport sector is expected to dominate discussion at Absa Business Banking’s Transport and Logistics Thought Leadership Session on March 5.
The division’s vice-principal for the sector, Bernard Vilakazi, was frank when asked what to expect given the backdrop to the event – escalating warfare in the Middle East and the impact on oil supply.
“I think it’s going to be all about the f-word – fuel, fuel and fuel.”
But apart from the fuel price increase earlier this week, which Road Freight Association chief executive Gavin Kelly attributed to the Middle East situation, running-cost challenges were only part of the picture, Vilakazi said.
With tight delivery times, pressures on key trade lanes, and the integrated role of hauliers across the bigger value chain in the global market, he expected a lot of interest in how Absa could assist operators overcome headwinds, he added.
The raw materials that transporters were moving to our ports and the finished product coming back, could all be linked in one way or another to what’s currently unfolding in the Persian Gulf and its immediate environment, Vilakazi explained.
“What we might be seeing is decreased volumes in the long run. And also, what does it mean for risk appetite and how it impacts business confidence and inflation.”
Curve balls during the session that may come Absa’s way – as the transport and logistics sector yet again navigates sudden supply chain shocks – are also why the bank’s chief investment officer, Ricardo Smith, will form part of the discussion.
Ultimately, the session would be to gauge the industry’s concern about cost pressure, Vilakazi said, and how the bank could help transport companies survive and thrive in the face of oil-price impacts and related business challenges.
He said that over and above financing, Absa wanted the wider industry to understand that the bank was also there to help with business development and risk mitigation.
Vilakazi said non-financial support was one of the pillars that the bank had factored into its business bouquet for the sector, and that Absa was dependent on progressive engagement in this regard.
“We want our clients to speak about risk elements and to understatement what are the developments, so that we can tailor the right solutions for them.”
It’s only through providing industry with the necessary means to communicate concerns, that Absa can advise operators about the necessary risk-mitigating strategies.
Properly managing risk shouldn’t be an afterthought, Vilakazi said.
“It’s something that we need to lead with as we have our client engagements.”
