Costs relating to insurance would increase as the risk to insurers has increased over the last four years, partly as a result of the constant attacks on freight. Picture: Karen Sandison.
South Aftica is fast losing its "Gateway to Africa" status as the burning of cargo trucks and blockade of major arteries scares away transporters who get hit for between R3 and R10 million a pop when a truck is reduced to scrap, the Road Freight Association (RFA) has said.
In a statement, RFA CEO Gavin Kelly said cargo owners will now choose to route their goods through neighbouring countries in fear of the attacks at South African Ports, especially the Port of Natal and along the corridors that have been targeted.
“This has already been happening as South African ports become inefficient, and the surrounding ports develop, improve and drive efficiencies up. South Africa’s “Gateway to Africa” status has been lost, and these attacks will further cement the move of transit freight from South Africa to neighbouring countries. Port revenues will drop, as will income through all support and related freight logistics users,” Kelly warned.
This comes after a truck carrying several new motor vehicles was burnt down earlier this week along the N3 highway by protesters, from Phumula, in Germiston on the East Rand, who blockaded the N3 freeway and set alight a truck that was carrying six vehicles on Monday night.
The protesters were incensed over electricity blackouts and other service delivery issues.
“Road carries 80 percent of South Africa’s goods. Simply put: when trucks stop, South Africa stops. The looting and violent attacks on road freight logistics vehicles - which occurs whenever someone is upset - and the wanton destruction of trucks and goods have begun to undo both the status of South Africa as a safe haven for investment and as an efficient logistics hub for foreign traders,” Kelly said.
He said the cost of loss of income through businesses closing is far greater, citing instances where small businesses have lost their only truck or trucks, which meant loss of earnings/revenue for the business, loss of salaries paid to staff who would no longer have jobs (due to business shutdown), loss of revenue through the services and support the business uses (eg. fuel, storage, maintenance, tolls, staff requirements, licensing, etc).
Kelly said the potential closure of businesses means fewer transporters available to perform work as some companies might feel the industry is not a safe environment, and so their owners could decide to simply close their business.
“What started out as sporadic incidents on one or two routes has become the norm on any and all routes of the total supply chain and is affecting destinations and originations. With the total supply chain now being impacted, the economic effects are far-reaching. Whilst short-term losses run into millions of Rands, the long-term impact is incalculable and will be felt long after the burning has stopped and when it is far too late,” Kelly said.
He said costs relating to insurance would increase as the risk to insurers has increased over the last four years, partly as a result of the constant attacks on freight.
“The evidence is clear that road freight is attacked as it is an easy target and the looting prospects are huge in terms of the quantity and the variety of goods that can be looted. Security costs will increase as logistics companies are forced to employ guarding services. Routing will change to safer (but perhaps far longer) routes, where control is easier,” he said, pointing out that the consumer will foot the bill for what has happened – through both indirect charges relating to the cost of logistics and as risk appetite softens and insurances demand more for premiums.
“What cost are we looking at? The cost to operational assets is just the tip of the iceberg – and as reports come in, this may very well grow. However, the cost to the South African economy will run into billions of Rand lost as business confidence from foreign investors plummets and those who use South Africa as a transit hub turn away from us and move to other countries that are safer and more efficient,” Kelly said.
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