The wide-spread floods that hit Durban and surrounding areas over this past week is going to impact negatively on business confidence and make it even more difficult for companies which are still trying to recover from the large scale looting and burning that took place in KwaZulu-Natal last year.
Clinton Holcroft, CEO of Serco, a leading South Africa truck and trailer builder and president of the Durban Chapter of Entrepreneurs Organisation, says an indication of the impact of last year’s unrest is that Serco started this year with its lowest order book since the huge financial crisis of 2008.
“I attribute this to a large extent to the loss of business confidence and the extensive property damage which resulted in many businesses not being able to resume trading by the end of the year – if at all. And now we have this – the negative impact of the floods” says Holcroft.
Looking wider, he says that the invasion of Ukraine by Russia would also harm the economy with increases in the price of fuel and raw materials for some key components already being seen. “Price increases will put added pressure on business and to some extent, be passed on to the already stretched consumer.”
He adds that clients wanting to replace vehicles have had some difficulty in securing trucks as suppliers are still battling to keep up with demand due to the global shortages of silicone chips. “Unfortunately, I think the war in Ukraine will put further pressure on supply chains and prolong the parts shortages.”
Holcroft says there was already lot of uncertainty about the year ahead in terms of business prospects in the transport industry and the damaging impact of the floods have now added to this uncertainty.
“Companies that had delayed capital expenditure over the last two years are experiencing mounting pressure to replace older equipment due to higher maintenance and breakdown costs. The adverse impact of the floods could perhaps now extend those delays for certain businesses.”
Given all these conditions, he says it is imperative that customers now plan at least six months in advance to help alleviate some of the challenges when sourcing new commercial vehicles, including truck bodies, fridges, tail lifts and similar items as well as help ensure on time delivery.
On a positive note – and taking the floods out of the equation – he says there had been a promising increase in inquiries for new vehicles during March and into April as customers re-examined their vehicle replacement programmes, which augured well for a better year ahead.
“Serco is grateful to have recently been awarded a significant tender to build refrigerated bodies for Imperial Logistics. This will go a long way towards restoring order volumes and has enabled us to create jobs for a further 56 operators at our KZN manufacturing site – a small but significant step towards rebuilding South Africa’s economy.”.
In terms of any flood damage to Serco’s Durban, it has been minimal as the factory is situated on higher ground than down towards the N2 area where flooding caused extensive damage to business premises.