SAFM Podcast with Mr Grootes “9 Apr Mediated Conversation: How should the issue of Truck drivers be handled?” Guests: Ofentse Mokwena – Transport Economist and analyst; Mary Phadi – Convener of Truckers Association of South Africa; Hlasinyane Motaung, The Motor Transport Workers Union spokesperson.
MetroFM Podcast with Mr Cawe 18 April “Do we really have a supply challenge for truck drivers in South Africa?” Top story of the day.
There are more trucks on our roads than there are minibus taxis– that’s about 370 000 to 320 000 in 2018. Bearing nearly 1.2bn tons on our roads, compared to the 42 million carried by rail in 2018. In terms of their share in total tons being transported the road transport sector accounts for 78% of all land transport tons shipped while the rail sector accounts for the remained. The challenge for the road transport sector is that income per ton has stagnated, or at least is growing at a slower rate than the rail transport sector. This is not a complete measure, but it could intimate that the road transport sector is saturated to some degree. Perhaps it must we must determine what could lead to increasing tonnage but lower income per ton? The closest answer with the limited data is that the market is saturated.
How the trucking industry works takes on a number of forms. Some firms pursue large and long-term contracts and use that to secure big truck leases, or purchases through banks against the backdrop of a full-time team. Small firms could do the same thing, but with much greater financing constraints. Either way, whoever has the primary contract runs almost controls the margins and sets the price. As such, a major contract holder could be short of a few trucks for a consignment. The contract holder may cut the consignments into smaller Letters of Intent, LOI. A freight forwarder, broker or trader may gain access to these LOIs and attempt to combine suitable trucks, trailers and qualified drivers in a network of emails, and contacts. The end result is a middle-person looking to gain some commission from the deal while also sticking to the prescriptions in the LOIs. It is only reasonable then to make sure that the (a) cheapest energy to propel the consignment, (b) the most affordable combination of trucks and trailers; and (c) the vehicle operator who is most productive at the lowest cost is selected. Large companies may struggle to do this because of labour unions behind their constituencies; but smaller companies may pick their lot from all the cheap energy, vehicles and labour they can find.
In this morning’s discussion with Mr Grootes on SAfm, Dr Nzimande, Minister of Transport, argued that domestic labour needs to be protected. Ms Phadi argued that the road freight sector needs to be regulated and our last speaker, Mr Motaung purported that there are limited incentives for labour protection if it means SA drivers are employed at bargaining council salaries. All of which were discussed against the backdrop of the Africa Free-Trade Agreement which argues that regional integration is at the heart of the future of Africa’s development. This would mean consignments moving across borders, with African labour circulating all over the place. One extreme could be to have a driver network; the other extreme could be to switch drivers at borders. My suggestion on this issue is to focus on integrating the freight logistics sector at large in order to enable higher quality regulation that could incentivize driver well-being as much as increasing profit margins for small and large firms.
*The opinions expressed here are not on behalf of any entity. Hold me accountable for any errors.