Fewer vehicles affect supply and demand ratio Alan Peat AFTER YEARS of cut-price warfare in the trenches of the road freight industry - particularly in the battleground of port-to-destination container transport - road rates are beginning to harden in 2002. As FTW forecast (November 30, 2001) the continuing downward pressure on rates has eventually forced the ratio of supply and demand into a more balanced state, and truckers are beginning to be able to ask for better transport charges. As forwarders Safcor Panalpina told us late last year, the on-going change in the road freight industry had seen margins substantially reduced. But what they noticed happening in November was transport companies simultaneously increasing prices while shortening the periods for which they would hold their prices firm. This has indeed been the case, according to Paul Rayner, chairman of the Durban Harbour Carriers section of the SA Association of Freight Forwarders (SAAFF). While a short-haul carrier in his own right, Rayner has been “chatting to those in that section of the industry”, he told FTW. “There has been a hardening of rates,” he added, “and a shortage of vehicles because the large groups have been closing down some of their subsidiaries, and rationalising others.” It has 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 has certainly had a favourable effect on the supply/demand situation, he told FTW. Chris Marais of Imperial Cargo - one of the major road transport operations which had its own period of rationalisation last year - agreed. Happily, he suggested to FTW, the industry is into a period of hardening rates. “Transporters have been raped over the last three-to-four years,” said Marais, “with hordes of fly-by-night cut-price operators - all thinking they could make a fast buck out of trucking - seriously hurting the industry.” But a lot of these have now come to grief, catching a fatal disease from their own price-cutting. This, Marais told FTW, when their limited income met up with the high capital cost these truckers had sunk into their vehicles, and the disturbingly high variable costs (like tyres and diesel) that they would continue to meet along the way. Add to that the liquidations and rationalisations in the bigger road haulage outfits and there are suddenly a lot fewer trucks on the road. “So rates have been able to rise, something I feel will continue throughout the year,” said Marais.
