More strategic approach for road freight industry

The overall drop in volumes and costs, however, occurs in the context of an 85% increase in the use of secondary roads in the country as freight routes. The study notes that while the country's primary road routes are well-maintained, they are also operating at or beyond capacity due to the freight mode imbalance being estimated at 85% to 15% in favour of road.

The recent trucker's strike and the imminent arrival of a new set of toll fees on Gauteng's highways are symptoms of a wider set of economic and political pressures on the road freight industry in our country.

The imbalance of road transport over rail in SA is well documented, leading to a serious set of consequences such as labour unrest, cost escalation and increasing wear and tear on road infrastructure. Yet, the provision of additional rail infrastructure to help balance the load and make SA's freight supply chain more internationally competitive, is naturally a long way off.

What can be done in the shorter term to address the pressure on the SA road freight distribution network?

Toll fees, secondary roads suffer

It is in this context, that the toll fees, and their potential impact on the road freight industry, should be understood. Business Unity SA recently announced a possible proposal to government to reconsider the toll fees altogether. While the fees will provide a source of much needed revenue to repay maintenance work on the primary road network, it may not be necessary, argues BUSA. The fuel levy may provide the same kind of revenue base for maintenance and investment.

In either scenario, the secondary road network, currently overburdened because of congestion, will come under further strain as smaller freight operations take their fleets to alternative routes to avoid the costs of tolling. SANRAL, who controls the tolling and uses the revenue, does not have jurisdiction over these roads.

For many smaller freight operators, indeed, these tolling costs will make the difference between profitability or not in their businesses. Even larger logistics companies are looking for ways to pass on the additional, considerable costs to their customers, which may ultimately increase the price of goods and negatively impact macroeconomic growth.

Decline in infrastructure investment

The more recent 2011 findings of the Barloworld Logistics-sponsored supplychainforesight report has further major findings which give cause for concern.

Firstly, the study, which benchmarks SA supply chain performance against emerging economy competitors, finds a general decline in investment in fixed infrastructure in SA over the last twenty years, compared to an increase in such investment in economies like Brazil, India and Ghana. The overloaded state of our infrastructure is compounded by the recent emergence from recession led by the commodity cycle and an upturn in trade volumes. A strong majority of respondents in the survey felt they would se an increase in freight volumes this year - the bulk of it going by road.

Lastly, the supplychainforesight study delves into the skills crisis, and finds it worsening across the board in SA, with a lack of public-private sector co-ordination on skills development worsening the situation. Inside most supply chain and logistics operations in corporate companies, preference is given, the study found, to internal measures such as peer group programmes, mentoring and management development. While these are necessary for middle management, also urgently necessary are programmes focused on getting more skilled artisans - and, in this case, skilled drivers, into the industry in the first place. Incentives, such as above minimum wage remuneration and improved working conditions, have to be considered in this case.

Strikes cripple industry further

This is the supply chain context in which the recent trucking strike took place. It provides us with an object lesson in the need for a more strategic approach to managing the road freight industry. The reporting on the strike in the media focused largely on wage negotiations, but in fact the allied transport workers' unions had a range of demands on the table relating to working conditions and benefits. After a three-month negotiation period during which the industry body, the Road Freight Employer's Association, didn't concede on these issues, the unions declared a dispute in January.

Obviously, it is only when strike action is taken that the strategic value of truck drivers, and the industry as a whole, is seen. The strike, especially when it turned violent, should have provided the 'burning platform' for radical change in the industry. Instead, there has been a reactive approach to settling the immediate issue, which was wage negotiation. The industry, and therefore the country, loses far more money - and reputational damage - through strike action, than it would by acceding to negotiated wage increases in the stipulated negotiating period.

Aging truckers

But more importantly, in the wider context of a crippling shortage of skilled drivers and trucking companies being squeezed out of business, first by the recession and then by cargo owners pressuring them on rates, the road freight industry is run as a purely commodity business. This means that overloading, poor distribution and route planning, and the overuse and consequent destruction of our secondary road system, are all now approaching critical levels. In simple skills terms, around 50% of the current skilled driver workforce is aged between 45 and 55 years. With a retirement age of around 60, and very few new young drivers coming into the industry, the situation is parlous.

Among the chief reasons for the scarcity of younger drivers in the industry are working conditions, precisely one of the issues raised by transport unions in the recent negotiating window. Long hours, fatigue, and poor on-road conditions all cause needless injury and fatality. But the reaction of industry and cargo owners is to continue to squeeze cost out of the transport industry by overworking drivers in unsafe conditions, and, as mentioned before, often paying them minimum wage - a short-term view, which creates a vicious cycle of damage, neglect and bad business practice.

Strategic lynchpin thinking needed

The bottom line here is that the road freight transport sector has to be seen as a strategic lynchpin of the SA economy, not a cheap commodity to be squeezed on cost. The violence of the recent strike also bears witness to the desperation of many drivers and transport workers to continue working - something which the industry body and the cargo owners should be mindful of. A short-term cost in improving working conditions, wage and benefit structures, and the conditions of vehicles, will have many long-term positives, both for the road freight industry and for the country's infrastructure and economic productivity. Without wheels the country does stop - but a long-term strategic view from industry management itself is needed to make them turn more effectively.