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Johannesburg – The importance of the road freight industry to South Africa s economy is underscored by the fact that 86 percent of the freight transported annually in the country goes by road.
Road Freight Association of SA technical and operations manager Gavin Kelly said the latest e-Natis figures showed there were 557 795 commercial vehicles of m ore than 3500kg on South Africa s roads, including trailers . According to Statistics SA, road transport contributed nine percent to the economy, he added, and a total of 103 000 formal and informal employees were employed by the road freight sector . However, the SA Transport and Allied Workers Union claimed 300 000people were employed by the sector.
According to the national transport master plan, demand for road freight is expected to increase in the period to 2050 .
File Photo: Simphiwe Mbokazi
Econometrix consultant Frank Beeton stressed the importance of road transport to the economy and the country . He said road transport was not cheaper than rail but shippers were prepared to pay for road transport because it was reliable, predictable and cost effective.
However, both the road and rail transport sectors are in trouble.
Economists.co.za chief economist, Mike Schussler, said in the latest edition of the RFA s Truck Talk that the latest data from Stats SA revealed that rail tonnage on a three-month moving basis had declined for 13 consecutive months on a year-on-year basis while road freight had a long 14 months of year-on-year declines.
Schussler said for the first time since the new Stats SA time series started there was a year-on-year decline in rail tonnage followed by another year-on-year decline a year later.
In regard to road freight, Schussler said the sector had not just experienced a simple recession but a long hard period with many firms going out of business and tight budgets overall.
This is the worst industry crisis since the great recession but the last three-month payload had increased and particularly containers and the manufacturing sector did well as manufacturing of food and some other products have improved despite the drought, he said.
The strain being experienced by the road freight industry is evident from the number people employed in the bargaining unit, with a total of 3987 employees retrenched in 2015 and 2450 retrenched so far this year.
According to the transport department s national transport master plan, which was updated in June, demand for road freight on most of the country s national corridors was expected to increase in the period to 2050, with the number of road freight vehicles anticipated to increase to more than a million by 2050.
The department added that cross-border traffic would rise to more than a million freight vehicle border crossings annually by 2050.
But Kelly said all estimates would need to be revised given the current economic climate . The number of operators in the road freight industry had shrunk by about three percent over the past two years, he added, with micro, small and medium operators plus a few large operators largely affected.
The industry is under severe pressure and the closing of many mining operators has severely curtailed traditionally large tipper fleets, he said.
Schussler highlighted the strong competition between rail and road transport, adding that prices had declined in real terms, with the price per ton transported increasing by 4.5 percent for road freight and by 6.7 percent for rail transport since July 2014 .
However, general inflation had increased by 11.3 percent over the same period, indicating that both rail and road price increases were below the rate of inflation.
Wage increases in both industries were also between one and two percent above the rate of inflation, which was partially offset in the road freight industry by the decline in oil prices while the rail industry suffered badly because of the 20.6 percent electricity price increase, he said.
Schussler said it was a battle for survival in land transport sectors when costs increased and income declined, but it appeared that rail freight might have cost increases of twice the rate of road freight .
Nevertheless, Schussler had further bad news for the road freight industry, stressing that price pressure would continue for some time, wages would not be able to increase above the rate of inflation and there would be massive consolidation in the industry.
But rail would have to increase prices significantly because of the lack of income from the two commodity lines, he added, which would result in even more switching from rail to road.
Beeton said the most important challenges facing the road freight industry was that rail wanted to take its business away and the reintroduction of the permit system, which had been officially motivated by the need to try and reduce traffic and wear and tear on the roads.
But Kelly was adamant there was no threat to the road freight industry.
The reality is that rail cannot meet the demand from customers and to customers in terms of reliability, cost, security of load, service from door to door and efficiencies.
Road will always play a role in transport .
The lessons learnt here and across the world show this, he said.