This must be stopped. Now
The violence and looting has caused SA and its people incalculable damage and harm
Road carries 80% of SA’s goods. Simply put, when trucks stop, SA stops. The opportunistic mass looting occurring in KwaZulu-Natal and Gauteng, and the wanton destruction of trucks and goods, has spread to the wholesale and retail sectors, and distribution centres in these two provinces, and there is a real and imminent danger this will spread to other provinces.
What started as sporadic incidents on one or two routes has spread to the total supply chain, affecting the transport legs (all forms, whether local or long-haul), as well as destinations and originations. With the supply chain now affected, the economic effects are far reaching, and the collapse of the supply of all goods will be the immediate result.
Short-term losses already run into billions of rand; the long-term impact is yet to be fully realised. Depending on the category of vehicle, type and value of cargo, and the specialised equipment required for the cargo, this can be anywhere from R3m to R10m per vehicle. A simple calculation of capital losses (assets and cargoes at an average of R5m per vehicle) of the 40 trucks destroyed to date amounts to about R250m-R300m. And while I write this more vehicles are being destroyed.
The loss of income through businesses closing is far greater: there are instances where small businesses have lost their only truck, or trucks. This means the loss of earnings and revenue, the loss of salaries paid to staff who would no longer have jobs due to business shutdowns, the loss of revenue through the services and support that the business uses (fuel, storage, maintenance, tolls, staff requirements, licencing).
Employees who lose their jobs won’t be able to support their families and the retail businesses they frequent in supporting their families’ needs, while the potential closure of businesses means fewer transporters available to work. Some companies may decide the industry isn’t safe and their owners could simply decide to close the business.
Freight moving through SA ports (especially Durban and along the transport corridors that have been targeted) has been severely disrupted, and some cargo owners and customers will choose to move cargo through neighbouring countries in future. This has already been happening as SA ports become increasingly inefficient and the surrounding ports develop, improve and increase their efficiency.
SA’s “Gateway to Africa” status was already being eroded and under threat over the past three years of violence against the road freight sector. That status is now lost, and these attacks will further cement the move of transit freight from SA to neighbouring countries. Even local companies and logistics providers are looking at alternative export-import routes away from the KwaZulu-Natal corridor (and SA ports). Port revenues will drop, as will income through all support and related freight logistics users.
Costs relating to insurance will increase as risk has increased over the past three years, partly as a result of the constant attacks on freight. The evidence is clear that road freight is attacked because it is an easy target and the looting prospects are huge in terms of the quantity and the variety of goods that can be stolen. 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.
The consumer will ultimately foot the bill — through indirect charges relating to the cost of logistics, the need to build reserves to repair damaged infrastructure, and as goods become scarce. Supply and demand will dictate costs — and if supply cannot meet demand, demand will drive up prices.
The looting and destruction of retail points (from small businesses to large malls, from regional to national distribution centres and warehouses) will force closures while damages are ascertained, repairs are done and stock levels are replenished. There will be shortages. Some companies have already noted they will not reopen and the direct job losses (in those companies) and the indirect job losses (from all their service providers) will be huge. The cycle of unemployment will continue to spiral upwards.
The cost to operational assets (vehicles and infrastructure) is just the tip of the iceberg — and as reports come in this will grow exponentially. We are already looking at billions of rand lost in the total logistics supply chain — without factoring in the damages to commercial retail space. The costs to commercial retail and related damage will be phenomenal — and the impact on the investors and owners of these facilities has not been factored in yet.
The cost to families and communities where jobs will be lost will be crippling. Millions of rand will be lost in salaries and wages, but more importantly millions of people will become destitute. The long-term implications of this have also not been factored in yet.
The damage to the SA economy will run into billions of rand as business confidence drops, foreign investment plummets or is withdrawn, and as those who use SA as a transit hub turn away and move to other countries that are safer and more efficient.
A state of emergency needs to be declared, immediately. The time has come for the gloves to be taken off. Law and order needs to be restored, and the perpetrators, instigators and inciters of the violence and destruction of our economy must be harshly dealt with. The police minister previously referred to such activity as economic sabotage. If that is so, the government needs to treat it as such and deal with it in the appropriate manner.
The country’s infrastructure, people’s lives and livelihoods and the right for all citizens to live in a safe environment have been trampled on by those who wish to have their will imposed. This must stop. Now. President Cyril Ramaphosa must do what is necessary to protect the people of SA. We need directed, focused, firm and resilient leadership to stop what is happening.
• Kelly is CEO of the Road Freight Association.
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