Gavin Kelly, CEO of the Road Freight Association, says Transnet's declaration of force majeure to avoid honouring contractual commitments to its customers during the wage strike was unjustified and unacceptable and would have huge economic consequences.
“When you declare force majeure you're saying that something came along that you couldn't foresee. Here we have a labour disagreement which didn't just happen yesterday, it's been a point of discussion between Transnet and its employees for some time.”
The strike was foreseeable and Transnet should have had plans in place to ensure the port of Durban kept functioning, he says.
“One would have a reasonable belief that Transnet would have made alternative arrangements to make sure that critical operations in the port would continue.”
He says their track record suggests that neither Transnet not the government understand the catastrophic economic consequences of closing the country's busiest port.
“What we saw during Covid was a total lack of understanding by a number of government authorities that if they don't do what they're required to do, businesses grind to a halt.
“And when businesses grind to a halt, one of two things happens. Either they close or they no longer earn or make a profit, and in both cases they no longer pay tax.”
Transnet cannot manage this on its own, it needs a meaningful public-private partnership. The concern is we've been talking about this for 10 or 15 years and we haven't come up with a solution yet
He refers to a cabinet minister who he says couldn't see the connection between businesses paying tax and the government having money to do the things governments do, such as paying ministers' salaries.
“There's a huge chasm between their understanding of where the government gets its money and ensuring that business keeps going because this is what keeps the country going.
“There's a total lack of understanding as to what sort of impact closing a port like Durban or Richards Bay has on the whole country.”
Based on the latest trade numbers from SARS current port closures have blocked more than R8bn worth of imports and exports each day.
“We’re not talking unintended consequences here,” he says. “Continuous decay of basic infrastructure and inefficient processes for clearing goods out of the port has brought us to where we are today. That's not an unintended consequence. The consequence was staring them in the face.”
He say it's clearer than ever that Transnet cannot manage the ongoing ports crisis on its own. The logistics industry could help fix the problems “if we were allowed to”.
The first part of any solution would be a plan to ensure that the ports operate efficiently 24/7, no matter what.
“If they remain state-owned entities we're going to have to make sure we have a plan that can deal with labour unrest. So that it's agreed that when this happens the port will be run by the private sector until the strike is over and then handed back.”
Another way of preventing an economically crippling port closure every time there's a wage dispute would be to declare ports an essential service “so you can't have strikes there”.
He says the crisis is another big wake-up call for the government. “But previous wake-up calls haven't brought the type of reaction or solutions that we need.”
It's time for the logistics industry to get more “realistic” with the government. “Everyone needs to know exactly what the state of play is.Unless that is acknowledged, firstly, and secondly proper solutions are agreed on and stuck to, we’re not going to get anywhere at all.”
Kelly says the strike and closure of the ports will give shipping companies more reason to bypass SA. The number of ships coming to South African ports had already started falling before the Covid slump.
The quiet period during the pandemic was an ideal opportunity to repair and upgrade infrastructure at the ports, he says. Other countries took advantage of the opportunity, but SA did not. “The infrastructure has just continued going backwards and the ports are not operating anywhere near as well as they should be.”
Local and foreign companies that import and export through SA's ports are looking at alternatives. Chrome and platinum group metals miner Tharisa has announced it is trucking its product to Maputo, and companies in Mpumalanga in the fruit industry have started using Maputo and Walvis Bay.
“When shipping lines realise that half a day's sail to a port on the east or west coast of Africa is a better option than sitting for five or 10 days outside a South African port, getting into the port and then not knowing if you're going to be loaded or offloaded within your scheduled time, we'll really struggle to get them back.”
A couple of years ago it took at least 21 days to get a container out of the port of Dar es Salaam, he says. “We used to laugh at that, we thought it was ludicrous. Now they've cut those times down to seven days and in some cases are far quicker than Durban. So we've got to be very careful.”
Kelly believes the government doesn't fully understand the economic consequences of SA losing its gateway status, and how many local businesses depend on that status for their revenue. “It's terrible to say this, but the reality of what we would lose is not fully understood. This is why other countries are scrambling for this because they understand its potential.”
There are many lessons from privately run ports around the world that SA could learn from to improve turnaround times for port operations, he says.
“Transnet cannot manage this on its own, it needs a meaningful public-private partnership. The concern is we've been talking about this for 10 or 15 years and we haven't come up with a solution yet.”
He doesn't believe Transnet is solely to blame. “There are three or four government departments who all have a finger in the pie. There isn't one that is solely accountable or responsible or has the power to make these decisions and get on with the damn job. Everyone is forever having to be consulted and it just doesn't seem to get to an end.”
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