The Transnet strike will cost the logistics company and its value chain up to R1bn day.
That's according to research by the South African Association of Freight Forwarders (SAAFF) after the state-owned entity’s logistics employees downed tools.
And business leaders say the knock-on effects spell potential disaster as they pose risks to a number of things, including importation of medical items and materials vital to the chemical and mining industries.
United National Transport Union (Untu) members have been on strike since October 6, after a breakdown in wage increase negotiations. South African Transport and Allied Workers Union (Satawu) members joined on Monday.
On Thursday, the parastatal’s latest offer was rejected.
Though there was some headway when the CCMA intervened this week, the unions rejected Transnet’s offer of a 4% to 5% increase on Tuesday.
Transnet tabled a new, three-year offer on Wednesday. It said the offer would be structured as follows:
- A 4.5% increase across-the-board (ATB) on the current year, effective from October 1, a 5.3% increase for 2023/24 and a 5.3% hike in 2024/25.
- The medical aid allowance would increase by 4.5% for 2022/23 and be adjusted in line with the ATB in the subsequent two years.
- The back-pay would be paid in two tranches — three months’ back-pay on November 15 and three months’ back-pay in January.
Both unions say they are not prepared to accept anything below inflation, which is 7.6%.
“From Thursday, Satawu will intensify the strike on the streets until the employer does the right thing. The employer must pay the workers on the ground instead of giving themselves salary increment every year while doing nothing but enjoying the luxury of their offices,” the union said.
Satawu has taken the mandate of the workers that the workers are more than ready to strike for the next couple of months if that’s what the employer wants, as they practically have nothing to lose, as the employer is already exploiting our people.”
The SAAFF called for a speedy resolution to the deadlock.
“SAAFF research shows that logistics delays to the supply chain cost our economy between R100m and R1bn per day. However, when calculating the total economic cost, the final consequence of the devastating impact is far higher than that. As we have learnt during the pandemic, it is absolutely essential for supply chains to be maintained at all times,” said Dr Juanita Maree, CEO of SAAFF.
Combined with the ripple effect, the impact is more than the country can absorb, given the current economic climate
— Dr Juanita Maree, CEO of SAAFF
“According to the latest SARS merchandise stats, R343bn 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 R8bn worth of goods each day. Combined with the ripple effect, the impact is more than the country can absorb, given the current economic climate.”
Maree said the clearing and forwarding industry believes neither Transnet nor labour fully comprehended the economic effect of the strike.
“Simply put: we cannot run on a contingency plan for any length of time as the water-side and land-side are too integrated and spill over into one another,” she said.
“A one-day loss in port activity results operationally in 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.”
Maree said this was the worst time for another hit to the economy and, if left unchecked, the unintended consequences of the strike would be worse than the ongoing energy crisis.
“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.”
Maree said co-operation between parties in the logistics value chain was vital to international trade, economic development and job creation.
The sentiment was echoed by Business Unity SA (Busa) and Business Leadership SA (BLSA).
In a joint statement on Thursday, they said they were “deeply concerned about the ongoing strike by Transnet workers and the impact it is having not only on the logistics industry in this country in the short term, but also supply chains and South Africa’s reputation in the longer run”.
“Busa and BLSA have pledged to work with government and Transnet where possible to ensure continued limited operation of the ports where possible and similar contingency plans to prevent overcrowding in some ports and to support Transnet’s security measures.
“Business is also concerned that if this lasts more than a few days, cargo ships will not just skip slots at South African ports, but start taking South African ports out of schedules in the months ahead. This will add significant costs to either airfreight items or truck goods to and from other African ports, which will add to the inflation pressures South Africans are facing. This is why we need swift, sustainable resolution.”
Cas Coovadia, CEO of Busa, said: “We need a quick, sustainable resolution to this strike, not ad hoc solutions. The strike risks severe damage to the economy, not just in the short term, but also the longer term if it drags on and South Africa’s reputation for logistics gets further tarnished.”
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