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Emerging Trends Transforming Road Freight Logistics

Emerging Trends Transforming Road Freight Logistics. What needs to be done to ensure South Africa’s Economic Prosperity & Social Well-Being Prepared for the Annual Transport Legislation Workshop 2014 Presented by Max Braun Consulting Services.

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Emerging Trends Transforming Road Freight Logistics

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  1. Emerging TrendsTransforming Road Freight Logistics What needs to be done to ensure South Africa’s Economic Prosperity & Social Well-Being Prepared for the Annual Transport Legislation Workshop 2014 Presented by Max Braun Consulting Services

  2. Total Truck Operating Costs over the past five years increased faster than the inflation target set by the Reserve Bank and is likely to continue for a few more years

  3. In Search of Cost Containment Cost of Transport • Energy • Infrastructure • Availability of Drivers • Road User Charges • Compliance • Lack of Political Will • Low cost entry barrier South Africa not alone with this scenario. The USA battling with driver shortages, reduced driving hours. Together with the UK and EU the US face daunting increasing RUC and taxes. Transporters and fleet owners are pursuing ways to improve payloads, tonnage moved without increasing kilometres

  4. Defining Key Costs Factors Energy –average 12% a year Standing Cost per day = R3643 RPK = R17.54 = ave 7.7% pa Total Operating Cost = 7.7% pa Ton/Km (50% LF) = 116cents Assume a truck is delayed for just one hour a day. Based on a 12-hour day the standing cost per hour is R300 One hour a day for 286 days = R86 000 a year. The cost to the transporter is equal to transporting the load (approx 28 – 30 tons) over a distance of 5500 km for free Think 2 to 3- hour delays a day and a large fleet size!

  5. Improving Freight Logistics Efficiency What needs to be done and by whom? “We have no choice but to identify and address challenges in the logistics chain or South Africa will run the risk of being left behind by its neighbours” Dr Beverly Waugh, SASC (Freight & Trading Weekly April 2014) A wide variety of transporters, fleet owners, logistics and supply chain service providers engaged in freight logistics as it applies to various agricultural value chains, exports, FMCG, dry and liquid bulk, Funders, financial service providers and media rooted in the industry express their views and opinions Based on their individual and collective experience, expertise and management of major assets and investments in the business of transporting freight logistics express there opinions and suggestions

  6. Legislation The Role Players would like the 2014 government to make a firm decision to finalise, implement and enforce the legislation that has dominated this and other Workshops, seminars, conferences and organisedindustry associations for more than a decade. The ongoing amendments of existing regulations, proposed new rules and emerging legislation leaves a vast swathe of transport roleplayers and stakeholders hanging in the air. Each year plans are made ready to implement when the amendments or new Acts are gazetted. Some of the more frustrating aspects include: (no order of priority)

  7. Finalise, Implement, Enforce AARTO - especially as it applies to drivers Driving licenses – especially the PrDP for foreign drivers, Driving hours and the points demerit system Consignor/Transporter/Consignee in respect of overloading, Roadworthiness of vehicles and trailers, Traffic Law Enforcement – nationally trained enforcers Functional and accessible driver training programmes The new transport minister, DG and DDGs should establish a representative working group that includes industry wide experts to fast track the finalisation and implementation of outstanding regulations.

  8. Failure Rate of Transporters Analysis of high failure rates points to lack of systematic approach to basic transport and business disciplines Low cost barrier to entry, Looking for 100% funding Unscrupulous operators and brokers Do not understand transport costs One-sided agreements and unsustainable rates Weak, if any, ability to survive “Low cost entry encourages smaller less professional operators thereby making it difficult for reputable operators to invest in systems to improve efficiency”. Sujen Padayatchi ceo , Aspen Logistics

  9. Operator Accreditation Before granting first time Transporters an Operators Card Understanding basic management skills and disciplines as it refers to: • Vehicles • Loading & unloading (reg 330 A-D) • Drivers • Controlling kilometres & customer service • Relevant legislation & regulations • Identifying key transport costs • Cash flow & viable rates • Mitigating risks • Sensible & sustainable agreements

  10. RTMS Road Transport Management System Management system that encourages consignors, consignees and transporters to preserve roads, improve road safety and increase transport productivity and efficiency Self-Regulation a Road to Better compliance with regulations Improved freight logistics value chains More efficient movement of goods between centres of production and centres of export Heavy vehicle management standards : Loading, driver wellness, maintenance, training of transport operators, National standards for consignors. consignees, transporters and SADC countries (harmonisation) RTMS can provide the fundamentals of Operator Accreditation

  11. Infrastructure Challenges Tolls USA is spending $1 trillion on eTolls to upgrade and maintain its road infrastructure. This is the approach: - Toll after upgrade Limit use of toll fees to the road where collected Charge enough to cover costs – no additional amounts Improve level of service Per Km not per litre all etolls - Congestion at Ports • Crane Moves D • Documentation • R500 mn to upgrade • Border Gates • Corridors & Inland Ports • Cold Chain – food waste • Tolls & RUC “Prime causes hampering trip times, route schedules is documentation, lack of capacity and commitment” SASC Survey

  12. Summary Let’s work together, capitalising on the wealth of transport talent, expertise, experience, commitment we have across the industry, related market segments and government agencies to address the challenges identified by a diverse cross-section of road freight industry’s roleplayers What would do you think are the most challenging issues that need to be prioritised and fast-tracked? ADD YOUR COMMENTS TO THE FEEDBACK Your opinions and suggestions are valued and lends weight to making transport more affordable

  13. Thank You MBCS

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