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  October 22nd, 2022 | Written by

SAAFF Calls for the Urgent Resolution of the Wage Negotiations to Maintain our Supply Chains

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The ongoing impasse between recognized unions and Transnet is having a devastating effect on our economy – much worse even when compared to the ongoing energy crisis!

As we have learned during the pandemic, it is absolutely essential for supply chains to be maintained at all times. The South African Association of Freight Forwarders’ (SAAFF) research shows that logistics delays to the supply chain cost our economy between R100-million and R1-billion per day. However, when calculating the total economic cost, the final consequence of the devastating impact is far higher than that.

According to the latest SARS merchandise stats, R343-billion worth of goods were traded (imports and exports) by the country in August. If we consider that 70% of merchandise is processed via the ocean modality, the current inactivity blocks more than R8-billion worth of goods each day! Combined with the ripple effect, the impact is more than the country can absorb, given the current economic climate.

From the perspective of the clearing and forwarding industry – the workhorses of making the merchandise trade tick – the following aspects are apparent:

  1. The economic extent of this action is not fully understood by decision-makers.
  2. The unintended consequences of the port strikes will be far worse than our energy crisis if left unattended, as the shock to our economy could not have come at a worse time.
  3. Neither Transnet nor Labor seem to understand the full extent of the damage:  Simply put, we cannot run on a contingency plan for any length of time, as the waterside and landside are too integrated and spill over into one another.
  4. A one-day loss in port activity results in operationally a minimum of 10 days of recovery. However, the economic loss has a ripple effect on the economy, resulting in further foreign revenue loss at a time when our balance of trade is steadily deteriorating.. Therefore, our estimates are conservative at best and losses will likely run more into the billions per day!
  5. If the country and the government do not have money now, they will have much less in seven days. The strike is throttling our economy to the point of no return! We need decisive, urgent action now!

International trade remains an essential driver of economic growth and development – and importantly, job creation. Facilitating trade must take place on shared infrastructure via shared responsibilities from all parties. Any failure to facilitate trade has dire consequences for each and every South African! Against the backdrop of low growth, high unemployment, and rising living costs, we are doing an injustice to ordinary South Africans by leaving this catastrophic situation unattended. Collectively, SAAFF calls on Government and Labor to reach a swift resolution to the current impasse, as the time is ripe for decisive leadership on behalf of all constituencies.

The South African Association of Freight Forwarders (SAAFF)

SAAFF was formed in 1921 and is a national association with members throughout the Republic of South Africa. While it attends to matters of national interest, its constitution permits regions to form chapters of the association, to deal with local issues. Five regions have qualified to establish their own chapters:

  • Gauteng
  • KwaZulu-Natal
  • Eastern Cape
  • Western Cape
  • Border

The Association is a non-profit organization governed by a constitution which provides for a board of directors, with a Chairperson and Vice Chairperson. Its directors are highly experienced, senior executives from member freight forwarding companies, who are nominated and voted for by these members. A CEO reports to the Board of Directors and manages and directs the association.

Freight forwarding plays an essential role in international trade and our members are dedicated to facilitating this activity through their involvement in the management of transportation, customs clearing, documentation, third party payments and many other elements of international supply chains. We call the freight forwarder the “architect of transport”. Globalization and the need to reduce cost over the entire supply chain have re-focused the freight forwarder in ways that are innovative and functional.