Although not giving away any details as yet, Marcus Ellappan, director of road freight for Bidvest International Logistics (BIL), says the company has plans in place for an adjusted road-freight service offering which he believes will enable BIL’s road-freight division to be ideally positioned to offer faster and stronger supply-chain support in the wake of the COVID-19 pandemic. It’s all about adaptability as a means of survival and leveraging technology to simplify how business is done – and to save on costs.
Although FleetWatch would not normally run a story based on scant details of what the future plan entails, what we find interesting- and quite depressing – is Ellappan’s sketch of the market conditions brought on by, among others, COVID-19 which have led to the company talking about adapting to survive – and grow. Here’s how he outlines it – and it’s not a pretty picture.
“Road freight in this country is on its knees,” he says. “There’s a regional imbalance of freight due to the decline in the economy, which means hauliers are battling to generate revenue let alone operate profitably, especially on return loads.”
Last month the South African Association of Freight Forwarders estimated that local importers were facing roughly R1.4-billion in storage and demurrage costs accumulated during level-5 lockdown, with more than 20 000 containers piling up in storage facilities.
“And reports have since emerged of queues of up to 13 kilometres along the chrome corridor between Steelpoort and Maputo, with as many as 370 trucks lined up and waiting to cross the South African border. South African authorities were processing the backlog in increments of only four kilometres per day.
“In addition, the recent protests by truck drivers against the hiring of foreign nationals impacted on the utilisation of assets which also impacts negatively on profitability. Some hauliers are now downsizing fleets as trucks stand idle – and with that, jobs are being lost. In addition, the costs of complying with Covid-19 protocols have negatively impacted the costs of doing business, and often these costs aren’t recoverable.”
This comes on top of an increasing number of personal protective equipment (PPE) road-transport consignments being hijacked, or becoming a hot commodity for thieves at airports. In March this year, the Transport Asset Protection Association said that South Africa was the top spot in 2019 for high-value cargo theft (ahead of the Netherlands and the United Kingdom), with a staggering figure of R367-million in cargo stolen, a 195% increase on the year before. And, says Ellappan, “There’s an increasing risk of injury to drivers.”
“With human capital costs varying between 30 and 40%, many industry players are reducing staff headcounts. But they’re also reducing the sizes of their truck fleets so that they can inject cash back into their businesses to stay alive,” he says.
Is it any wonder then that he talks about adapting to survive? “Adaptability as a means of survival, let alone a point of competitive advantage, isn’t something new for business. As early as July 2011, a report by the Harvard Business Review (HBR) highlighted the increasing need for organisations to adapt, especially in an age of risk and instability. And in November last year the HBR again published a piece on why agility and innovation as means of adapting have become so important.”
“This,” he says, “is something BIL understands and fearlessly implements. Our business continuity plans have been adjusted to enable us to operate through these turbulent times and technology has enabled us to operate more responsively while maintaining a good degree of flexibility.”
Although, as mentioned, he is not giving away any details at this stage, Ellappan says the company’s transport-management system is being continually developed, “so later this year we’ll be able to offer clients a whole basket of new benefits. The product driver, combined with the right behaviour, and taking into consideration utmost compliance and excellent customer service, are elements that will form part of our new and adjusted offering.”
Vehicle-tracking and fleet-management business Ctrack’s Freight and Transport Index for June reflected a 21% decline in monthly freight volumes compared to the same month a year ago, the worst since records began, with the biggest volume drops shifting from local land-based to international transport, with drops of 44,5% (air), 28% (sea), 21% (freight), and 19% (road). The good news was that road-freight volumes increased in May compared to April, as the country shifted from lockdown level 5 to 4.
“We’re all in this together, and we empathise with what our industry peers are going through.” In saying this, Ellappan offers fundamentals to ensure a business stays afloat in the road-freight market in South Africa.
“First, staff need to be continually trained so that they become multi-skilled and part of a model that can be ‘flexed’ during varying economic conditions. Strict safety and compliance measures need to be continually upheld – and not only during times of crisis – so that employers can mitigate some of the immediate impacts a business may go through during the early stages of a global/national crisis.”
Operating a leaner business model and being in a position to add on rather than reduce, is something players should be looking at. And continually developing technology to simplify processes and eliminate wastage is another key area.
And the golden thread, he believes, is communication. “Communicate with all employees, as often as possible, so that they feel they’re being involved in the business’s decision-making and development. Many business strategies fail at execution stage because of a lack of communication,” he says.
It’s a grim picture at the moment but what this story serves to promote is that it while the odds seem stacked heavily against the industry at the moment, there are those who are willing to tackle the challenges head-on and adapt not only to survive but to grow.
FleetWatch will follow up on this at a later stage and get more details from Ellappan on what he describes as BIL’s “new and adjusted offering.” I’m sure he’ll share some of the wisdom. After all, as he says: “We’re all in this together.”