Freight sector falters

2012-12-06 00:00

THE South African freight industry is expected to show reduced risk in defaults in the air freight and rail sub-sectors as companies switch to safer transport options as a result of recent strike action.

The full impact of the recent wave of industrial action has yet to affect the industry, which is a critical element of the overall functioning of South Africa’s economy.

LAG EFFECT TO THE FORE

Businesses in the road transport and waste disposal sectors are expected to continue finding the going difficult in the first quarter of 2013.

Credit solutions provider Coface believes the true impact of the mass action will only be apparent in the fourth quarter of 2012.

LABOUR AND POLITICS

The political undertones of the recent strike action have not yet dissipated, increasing the risk of secondary sympathy strikes as the parties fail to come to any long-term agreements needed to quell the unrest.

International investor sentiment is regressing, with many investors viewing the current dissatisfaction as early warning signs of South Africa’s own “Arab Spring”.

According to the Road Freight Employers Association, “estimates indicate that employees in this industry are losing in the region of R270 million in wages per week, with around R1,2 billion in turnover being lost by the industry per week”.

THE WIDER IMPACT

Trade between South Africa and Zimbabwe hinges mainly on moving goods by road and accounts for 70% of Zimbabwe’s imports.

Industrialists in Zimbabwe estimate that the country lost as much as $100 million a day as a result of South Africa’s truck drivers’ strike.

This affected the flow of goods through the Beitbridge border post — Southern Africa’s busiest inland port.

The industry should be able to recover in the short term, but while the risk of future strike action remains, the threat of business failure continues to increase.

Saijil Singh is lead analyst at Coface, the international credit insurer.

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