Counting the cost
While the strike that hobbled Transnet’s rail and port operations is over, some businesses are concerned they may never recoup their losses
As Transnet’s recovery plans to stabilise its railways and ports gets under way after the crippling 12-day strike, some businesses fear that recouping their losses will be unlikely.
The strike ended when majority labour union the United National Transport Union on Monday agreed to sign a three-year deal for salaries to increase by between 5% and 6%, with minority union the South African Transport and Allied Workers Union also acceding to the deal on Wednesday.
But Jaco Swart, national manager at the National Employers Association of South Africa, said it was difficult to recover business that had been lost as a result of nonavailability of products.
He said the 8,000 members affected by the strike may never recover their losses.
“Sales that they were unable to conclude during this period will not be doubled in the subsequent time periods as demand will remain the same. That income is simply lost,” Swart said.
“These types of strikes that hold a whole economy to ransom at a cost of R1bn a day are irresponsible and should not be permitted by the government. Though the right to strike is constitutionally entrenched, it should also be exercised in a responsible manner.”
Swart added that Transnet should implement whatever measures were necessary to clear the backlog as quickly as possible. “The longer it takes, the longer the economy will suffer.”
Berries ZA manager Elzette Schutte said the effect of the strike would be felt in the next couple of weeks.
Schutte said Berries ZA members had forfeited about R300m due to losses of R150m per week.
“If they [Transnet] do not get the fruit out quickly, the losses will be even higher. If farms do not get paid for the fruit, they will not get money to pay people’s wages. If you don’t get paid for the berries, how do you keep people employed? Our employees are 90% women. These are people who need to be paid to provide for their families,” said
Schutte. Last week Berries ZA said the strike, which coincided with the height of the picking season, threatened 40,000 livelihoods.
Allan Seccombe, spokesperson for the Minerals Council SA, said bulk commodity exporters could now resume and recover, meeting their contractual obligations.
“The tempo of recovery differs from commodity to commodity. With coal and chrome to Richards Bay, for example, there are delays with trains and coinciding these with ship arrivals,” Seccombe said.
Last week, the council estimated that due
to the strike bulk mineral exporters were losing R815m worth of exports daily because they were unable to rail and load 357,000 tonnes of iron ore, coal, chrome, ferrochrome and manganese onto ships daily.
Seccombe said that since last week, however, there had been a gradual improvement as ports tapped into stockpiles and deliveries arrived.
“For example, over the past four days the losses have gone from R360m a day to R100m,” he said, adding that the council was calling for backlogs to be urgently cleared.
“Transnet Freight Rail should resume full service to its clients as quickly and as efficiently as possible to replenish depleted bulk mineral stockpiles at ports and to return empty wagons inland for its customers to load. Time is critical,” he said.
Business Leadership South Africa said the strike underscored the need for the logistics sector to be changed to allow private sector involvement in infrastructure assets, maintenance and movement of goods.
“Transnet ports have some of the highest costs and longest lead times, rendering them among the most inefficient of major emerging market ports globally. Durban, for example, is the largest port in Sub-Saharan Africa, but remains one of the most expensive in the world and in terms of efficiency falls far behind other global hubs,” it said.
On Friday, Transnet said it had lifted the force majeure declared in the automotive, bulk and multipurpose terminals due to the strike that affected their ability to deliver on contractual obligations.
However, due to the extent of the backlogs in the container terminals, the force majeure declared for them would likely be lifted by the end of the month, it said.
Earlier this week, when Transnet announced its post-strike recovery plans, CEO Portia Derby told Business Day the backlog would take six to nine weeks to clear.
But Andrew Pike, head of ports, transport and logistics at Bowmans, said logistics experts used a rule of thumb that one day of lost productivity would take nine to 10 days to clear, which meant around three months given that the strike lasted for about 10 days.
“Realistically, it will probably take somewhere in between those two estimates, but it will depend on factors such as the nature of the cargo being delayed, the number of ships waiting to discharge, the rate at which trucks can access the terminals and so on,” he said.
Pike said private dry-bulk terminals such as Richards Bay Coal Terminal would probably clear a lot quicker because it would have had some coal in stockpile when the strike began. Operations at the container terminals would arguably have the most significant effect on the economy and were likely to take the longest to clear.
The longer it takes, the longer the economy will suffer Jaco Swart
National Employers Association of South Africa national manager