Weaker rand puts more money in forwarders’ pockets

ALAN PEAT WHILE IT is pretty certain that some of FTW’s readers are not happy about the rand weakening against the US dollar, the freight forwarding industry at least has a couple of exchange rate benefits to be pleased about. First is that the weaker rand will add a little more momentum to SA’s exports – with the price gaining more of a competitive edge as the exchange rate slackens. Second is an interesting arithmetic calculation by one of our numerically-alert readers – showing that freight companies should be enjoying increased revenues of about 15% because of this different rate of exchange (ROE) Taking his calculator in hand, he examined some figures and made a comparison with the different ROE over recent weeks. “By comparing the ROE of May 5 at R6.17 to the US$, and the ROE of June 20 @ R7.11 to the US$, I have arrived at the following,” he said. “Say the consolidated freight collect for the current month is US$60 000 - that equals R426 600 at a ROE of 7.11. With the disbursement or agency fee @ 1.5%, that in turn equals revenue of R6 399.” His arithmetic formula then compared this to the figure for freight collect for the previous month, and read: US$60 000 = R370 200 (ROE 6.17) and disbursement or agency fee @ 1.5% = R5 553 revenue. That gave a net increase of R846, or +15.2%. “By adding more zeros,” he said, “for example, freight collect of US$60 000 being US$6 000 000 in a bigger agency – it would indicate a higher increase of R84 600.” While our source acknowledged that most companies would be billing daily at a different ROE, he still felt chirpy that the comparison - worked out against his own average figures - conclusively indicated that freight forwarding agents should have shown increased revenue in rand terms as the exchange rate has slipped.Good news for some.