Road freight in flames as transport economic regulation lags behind labour issues

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ZEERUST– Nothing rusty about this town on a busy month-end. Serving as a gateway between Botswana and South Africa, this town is rather busy. It has one of the richest spatial planning histories and a vast topography of heritage and culture in the form of smaller settlements scattered all-over and around the town. For every truck in SA, there is amost 1 minibus taxi– think about it, that is scary. How may drivers are there? How many families do they provide for? What are their working conditions? While they may be annoying along highways sometimes, it is important to reflect on whether it is time to seriously regulate the road freight industry in SA. 

The trucking industry and its underlying labour dynamics reflect fundamental economic principles. In a sense that, companies select employees that will offer the least cost with respect to their productive use of specific assets. The build-up is coming from a failed task-team effort which collapsed partly as a result of the parallel nature of the SA labour economy– especially in transport. From my observation, it is rather clear that transport labour issues are becoming much more complex and unique than anticipated. Two positions are important. First, the Road Freight Association (RFA), which has from insiders in the industry, been labelled as a white-dominated cartel for large trucking interests which may exclude small operators’ interests. Second, is the role of the Road Freight Strategy with respect to the trucking industry and the fundamental shifts en-route. 

However, the ATDF’s positions imply that the cost margin approach may not be suitable for domestic companies– big and small– which reveals a gap that the RFA has not been able to fill.

All Truck Drivers Foundation and the RFA

All Truck Drivers Foundation (ATDF) argues that foreign drivers are stealing their jobs according to a media statement from the Road Freight Association (RFA). In the RFA statement they reveal that ATDF demands that:

  • The immediate firing of all or any foreign  nationals employed in a company;
  • The immediate employment of individuals supplied by the ATDF;
  • Payment to the ATDF of R350 per person per month for each individual supplied by the ATDF; and thus
  • Control over who a company employs.

Non-compliance results into the events that have emerged recently throughout South Africa. The events range from unconfirmed reports of truck escorts, light and heavy vehicles being set alight, shot-at, or attacked in public places and along highways. The RFA reports that:

  • 1200 vehicles have been destroyed
  • An unverified estimate of 213 lives have been lost
  • R1.2bn cost to the economy in terms of lost income for drivers, families, loss/damage of vehicles, cargo, infrastructure, buildings and loss of income to businesses.

They argue that (a) all leaders must be arrested; (b) the use of intelligence capacity to prevent further damage; (c) prevent economic sabotage; and (c) create a national task team to combat this situation. On one hand the RFA plays an important role in ensuring stability in the road freight sector through advocating compliance, labour standards and operational integrity for both public and private sectors. However, the ATDF’s positions imply that the cost margin approach may not be suitable for domestic companies– big and small– which reveals a gap that the RFA has not been able to fill. There may be, among many other reasons, two core pressures which influence the tension: welfare and profit. 

Welfare and Profit in the road freight labour market

What could motivate such deep violence as a means of expression? Is there any word to console the families who’s bread-winners were draped in blood on their last days of work? A monetary value of R1.2bn will not reflect the cost of pain, nor would any task-team meeting bring anyone back to life, nor good-health. The challenge here is that the Road Freight Strategy in SA operates from a deeply limited scope. One of the major draw-backs is that it does not reflect the extent to which the road freight industry is leaning toward cut-throat competition. This is a situation where one day of an asset being under-utilised could result into the month’s profit lost for some small freight companies. Such a tension is made worse by:

  • High unemployment rates and unaudited road transport labour economies for large and small companies;
  • Pressure to keep costs as low as possible, yet utilising the vehicle as much as possible;
  • Operating in a manner that ensures that prices charged for contracts are competitive in order to win deals that keep assets (i.e. vehicles and facilities) working;
  • The impact of information technology, systems and service on the freight transport industry and the competitive advantage entities may derive; and 
  • Energy price volatility in the face of increasing number of trucks, and consignments demanding to be moved. 

Welfare economics suggest that regulators want at-least some participants to be better-off without anyone being worse-off. While the traditional profit side of the paradigm argues that regulators enable everyone to play and may the best player win– even if some or many are worse-off. Usually, you’d want a bit of both: welfare to ensure that there is a benefit across the board, and a profit orientation because competition is expected to force greater efficiencies. However, in reality, efficiency does not always guarantee quality. Quality in this context could mean ensuring a stable road freight economy that provides the greatest value to drivers, companies and stakeholders. Efficiency may be equivalent to keeping costs as low as possible in order to be very competitive and beat everyone in the game. 

Foreign or domestic, technology enabled or automated, markets fail and violence explodes without seriously responsive transport policy reforms that reflect and regulate the interests, incentives and behaviours of all stakeholders.

The welfare side of the equation, is in my opinion represented by the ATDF who are looking to secure domestic labour opportunities and potentially operate as a gate-keeper for future market entrants, including information technology. Meanwhile, an entity that is laying in between is the RFA, which appears to want to ensure the financial viability and political stability of road freight markets, while hosting large companies which may or may not pressurise smaller ones. Here is the regulatory question: with all the lives lost is it time to regulate the road freight sector more seriously? Potentially, yes: there is no room any longer to risk the lives of drivers. Foreign or domestic, technology enabled or automated, markets fail and violence explodes without seriously responsive transport policy reforms that reflect and regulate the interests, incentives and behaviours of all stakeholders. Treating it as a law enforcement issue only faces the symptom of the problem, not the incentives, pains and implications of non-decisions. Again, land transport policy falls behind facilitating development


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