Stocktake: Key supply corridors must be protected
The violent looting and unrest this week put the spotlight firmly on vital supply chain links in South Africa.
The violent looting and unrest this week put the spotlight firmly on vital supply chain links in South Africa and what needs to be done to avoid looming food shortages; as well as prevent disruptions to fuel and other delivers in the Southern Africa region.
Southern African trade corridor severely impacted
The South African Association of Freight Forwarders (SAAFF) has strongly condemned “the wanton destruction of the country’s key infrastructure, goods and property and the senseless loss of lives” over the past week, and called for urgent action to protect supply chains. SAAFF’s membership comprises freight forwarders, which are the architects of the supply chain. For the economy to function and for people to be able to survive and prosper, supply chains need to function unimpeded, the organisation said in a press statement. It said the closure of the Port of Durban and parts of the N2, N3 and N4 over recent days as a result of the looting and destruction of trucks, their cargo, shopping malls, distribution centres and beyond, has “severely impacted” supply chains. “This has massive short-term consequences and even more devastating long-term ones for everyone in this country. But the impact of the past few days will reverberate far beyond South Africa’s borders, the SAAFF statement read.
According to The Federation of East and Southern African Road Transport Association’s (FESARTA) CEO, Mike Fitzmaurice: “What has happened in South Africa in this last week has also impacted hugely on other landlocked countries in the SADC region, which rely heavily on South Africa for imports of fuel, groceries, pharmaceuticals, mining equipment/spares, vehicle spares, tyres and much more. Those countries that have used South Africa as a transit route for exports through the Port of Durban will now turn to alternate routes for exports, such as Walvis Bay, Beira, and Dar es Salaam.” As part of a collective from the private sector, SAAFF is appealing to all key stakeholders to play an active role in restoring South Africa’s crucial trade lanes along the main transport corridors of the N2, N3 and N4. Said SAAFF chair, Dr Juanita Maree, “There is an urgent need to protect our commercial ports as key national areas of interest, since they are the main arteries funnelling essential goods into our country. At this critical junction, it is vital for cargo to move, as further delays will not only deplete supplies, but will create further congestions, imbalances, and ultimately cost for all involved – especially the end-consumer, who can ill-afford it at this critical moment. The ensuing shortage of goods will only worsen an already compromised food security situation. For supply chains to operate, the national highway corridors and our harbours need to be able to move cargo safely and securely. We call on communities to come forward with any footage, drone footage or contacts of the looting and criminal activities that will help in identifying those involved. The perpetrators and instigators of these criminal acts need to be brought to book.”
Devastating impact on road freight industry
Road freight carries 80% of South Africa’s goods. When the trucks stop, South Africa stops. “The total supply chain in KZN is now affected, including all transport legs (all forms, whether local or long-haul), as well as destinations and originations. With the total supply chain now being impacted, the economic effects are far reaching – but the collapse of the supply of all goods will be the immediate result. Short-term losses already run into billions of Rands; the long-term impact is yet to be fully realised,” said Gavin Kelly, CEO, The Road Freight Association. “The cost to operational assets (vehicles and infrastructure) is just the tip of the iceberg – and as reports come in, this will grow exponentially. We are already looking at billions of Rands in the total logistics supply chain – without factoring in the damages to commercial retail space. The consumer will ultimately foot the bill for what has happened – through both indirect charges relating to the cost of logistics, the need to build reserves to repair damaged infrastructure and as goods become scarce.”
These are some of the losses expected so far:
- A simple calculation of capital losses (assets and cargoes at an average of R5 million per vehicle) of the 40 trucks destroyed to date amounts to around R250 million to R300 million.
- The cost of loss of income through businesses closing is far greater: there are instances where small businesses have lost their only truck, or trucks. This means loss of earnings / revenue for the business, loss of salaries paid to staff who would no longer have jobs (due to business shutdown), loss of revenue through the services and support the business uses (e.g., fuel, storage, maintenance, tolls, staff requirements, licensing, etc).
- Freight travelling through South African ports – South Africa’s ‘Gateway to Africa’ status was already being eroded and under threat over the past three years of sustained violence against the road freight sector. Even local companies and logistics providers are looking at alternative export/import routes away from the KZN corridor.
- Costs relating to insurance will increase, as the risk to insurers has increased over the last three years, partly as a result of the constant attacks on freight.
- Security costs will increase, as logistics companies are forced to employ guarding services.
Shoprite Group pledges to restock and rebuild
The Shoprite Group is working around the clock to re-stock and rebuild affected stores in KZN and Gauteng where unrest erupted earlier this week. It will re-open stores for business in these areas as soon as it is safe for both customers and employees. In other parts of the country all the group’s stores are fully operational and fully stocked. “While we have been affected by the violence, looting, arson and vandalism, we are doing everything in our power to restock shelves as quickly as possible,” the supermarket group said. It condemned the unrest and lawlessness which affects the livelihoods and lives of millions of law-abiding citizens and which targets businesses, big and small, that make positive contributions to the economy and the creation of jobs. “The mayhem and destruction are everyone’s loss, particularly in a country ravaged by a poor economy and joblessness, which have been exacerbated by the pandemic. The riots are only making our challenges, including food security, greater. We are especially grateful to our loyal customers, many of whom have reached out and offered to help with clean-up operations and want to assure our customers that we are working day and night to continue to feed and support the nation.” The group also thanked its employees for continuing to serve customers, and for going the extra mile under extremely trying conditions.
Game prioritises stock and delivery of essential goods
Amidst the disruption, Game Stores is focused on providing South Africans with essential goods in as many areas as possible, through its brick-and-mortar stores and its partnerships with Uber Eats and OneCart. “Our ability to deliver online orders has been affected in some areas, such as Durban and surrounds, where routes have become inaccessible or unsafe,” explains Game’s vice president, Andrew Stein. “We are proactively communicating with customers and doing all we can to minimise delays, including re-routing orders to operational stores and facilities. Our focus during this time is to ensure that our customers are able to shop essential items safely and conveniently.” Stein explains that the partnerships with Uber Eats and OneCart, which were launched during the initial Level-5 lockdown in 2020, allow Game customers to place their orders conveniently online with on-demand delivery. This service is for essential items only. “Delivery to our customers via the Game stores has been impacted, especially in KwaZulu-Natal, and operationally the team is communicating directly with customers via contact centres, as well as making every effort to ensure delivery of items in areas which have not been heavily affected by the unrest. The situation is developing rapidly and as such we are directing customers to our website where we have available updates.”
This week in numbers
The number of people who joined the Rebuild SA group on Facebook within three days, to volunteer to clean up malls and help businesses affected by the civil unrest in South Africa this week. This ubuntu, along with many other stories of communities pitching in to protect and aid businesses, is what makes South Africa special and why we will overcome. #rebuildSA
QUOTE of the week:
“The Consumer Goods Council of South Africa (CGCSA) has appealed to the government to urgently provide effective protection to its retail, manufacturing and services sector members, and to provide for the safe passage of delivery vehicles and employees, in restoring the supply food, pharmaceutical and medical supplies to areas affected by looting. The CGCSA is particularly concerned about the impact of the disruptions on food security across the country, and is calling on government’s support to avert an emerging humanitarian crisis. CGCSA is also urging the government to urgently open critical road networks such as the N3, and suspend tolls to enable the free flow of traffic. We also suggest that the government considers moving the toll gate away from the Mooi River constant hot spot in its KZN economic reconstruction plans,” read a statement from the Consumer Goods Council of South Africa (CGCSA) on Thursday, July 15, 2021.
*Stocktake is a weekly roundup of current FMCG retailing and brand news, curated and edited by Retailing Africa Publisher & Editor, Louise Burgers. Keep the industry updated and send your announcements and news to: email@example.com.
– Receive the Retailing Africa newsletter every Wednesday • Subscribe here.