Shippers vote with their feet against Transnet inefficiency

It’s a sad reality in the SA context
that our logistics enablers are
the very institutions that appear
to be sabotaging any post-recession
rebound.
Recent news that major perishable
exporter GoReefers has switched from
Durban to Maputo – which is cheaper
and more efficient – is evidence that
shippers are beginning to vote with
their feet.
“The volume cargo movers DO
have a choice,” says Dave Johnson
of Edgin Logistics, “and at the
moment South Africa is not it – we’re
expensive, we’re inefficient and we
don’t care.”
A harsh indictment that sums up
the prevailing sentiment among the
majority of Transnet customers.
“The Transnet strike earlier this
year proved quite damning for our
business,” says Johnson. “Not only
was there virtually no containerised
cargo movement, and hence no
unpacking and packing at our
facilities, but our staff complement
usually travels to work largely by
passenger trains and had to arrive, late
more often than not, by
other means.
“The disruption, both during
the strike and after while everyone
played catch-up, has obviously had
a negative effect on our turnover
and probably means a sharp drop
in year-end profits. In a low margin
business like ours you simply can’t
stop working for 10% of the year and
expect good results,” says Johnson.
“Couple that with a relatively quiet
June/July because of World Cup
activity, and it soon becomes apparent
that the second half of 2010 had
better produce some good volumes
otherwise the year overall is going to
be dismal.”
During the strike exporters had to
look at other options and Maputo rose
to the challenge, says Johnson. “Not
only operationally but it also came in
cheaper than Durban. It’s one of those
immeasurable losses that come about
as a result of a long strike. The door
is open now – and with economy of
scale the loss to our country will be
large.”
Johnson contends that large
parastatals like Transnet should
enter into an agreement with their
employees and the controlling unions
that all salary packages increase
each year by the exact percentage
of that division’s rate increase to its
customers. “That way market forces
will be the major influencing factor,
and there won’t be any disputes
and strikes that cripple the national
economy.”
In addition, he believes an
organisation like Transnet, which is
state-owned and so vital to the success
of our economy as a
whole, simply cannot post profits of
over R14 billion during a worldwide
recession. “Where is the Competition Board?
Transnet needs to distribute
90% of that profit back into the
businesses and individuals from whom
they profit.”
This can be accomplished in two
ways in his view. Firstly by employing
qualified, interested and accountable
staff and paying them accordingly.
“This will improve port and rail
efficiency and job satisfaction.
“The second is to place a
moratorium on further increases in
port services so that volumes of cargo
imported and exported can get back
to previous levels. They must start to
understand that although they have
a monopoly in our ports and believe
they can charge what they want, there
is a significant volume of African
business that
we lose to other countries, and there
is even more that doesn’t even take
place because the logistics are too
costly. When that happens we
all lose.”