Road rates expected to harden further

Alan Peat AFTER YEARS of cut-price warfare in the trenches of the road freight industry, road rates have firmed during 2002 and look to harden even more this year. The signs began to show late in 2001 as the continuing downward pressure on rates had eventually forced the ratio of supply and demand into a more balanced state resulting in better transport charges. Transporters had been raped over the previous three-to-four years, Chris Marais of Imperial Cargo told FTW. “Hordes of fly-by-night cut-price operators - all thinking they could make a fast buck out of trucking - had been seriously hurting the industry.” But, he added, a lot of these had come to grief, catching a fatal financial disease from their own price-cutting. “And,” according to Paul Rayner, chairman of the Durban Harbour Carriers section of the SA Association of Freight Forwarders (SAAFF), “there was also a shortage of vehicles because the large groups had closed down some of their subsidiaries, and rationalised others.” It had even got to the stage of putting trucks up on blocks, according to Rayner, to take some capacity out of an already overheated marketplace. But it certainly had a favourable effect on the supply/demand situation, he told FTW. Marais agreed, suggesting last February that rates had been able to rise - something which he forecast would continue throughout 2002. And all the signs suggest that this year will see a further hardening of road freight rates, said Barney Curtis, who handles technical and regulatory affairs at the Road Freight Association (RFA). One factor that should confirm this, Curtis added, is the traffic authorities’ intention to tighten up on their interpretation of the overloading regulations. “Road transporters will have to watch the present 5% tolerance that the traffic authorities have allowed truckers before hitting them with an overload penalty,” he said. “It could be cut to 2%, and those who load right up to the current tolerance level will have to cut loads to comply with the new rule.” This, in turn, Curtis added, will need a firming of the rates - if truckers are able to carry less per vehicle per trip. He also feels that another factor that will allow road rates to firm is that rail is just not coping. “And it is unlikely to do so soon,” Curtis added. “There’s a lot of emergency grain going through the region, so rail capacity has been reduced just because of that.” Curtis also sees no threat to the demand for road transport through the overborder region from the privatisation of railways to the north - like the Zambian and Zimbabwean rail systems. “Even although Spoornet is going to be involved,” he said, “I don’t expect this will make a major change to the need for road transport throughout the region.” Container sector In the container road transport sector, things have also tightened up and rates have firmed in recent times, according to Clifford Blackburn, m.d. of International Delivery Company (IDC). The new requirements are to deliver to an extremely tight schedule, he told FTW, and for road transporters to be able to miss out on the demurrage charges that will be levied if they can’t comply. “Shipping lines give seven days to deliver a container, and return it,” Blackburn said. “If someone along the route decides to use the container for something else, the original shipper will have to pay for the delay in the turn-in timing - and this in US dollar terms.” This procedure is going to continue, he added, and he expects the market to become a lot tighter. “The fly-by-nights are going to have to look at different markets,” said Blackburn, “not at containers - as the shipping lines and road regulations become even tougher.”