JOHANNESBURG - Four weeks into lockdown, road freight, warehousing and distribution companies are reporting varying levels of impact on their businesses.
“The effects of the economic decay are now becoming visible, as cracks in the economy start to show,” said Gavin Kelly, the chief executive of the Road Freight Association (RFA).
“The lockdown has seen a significant decline, even in our delivery of essential products and services, with consumer distribution volumes approximately 30 percent below the comparable volumes in April 2019”, said Super Group chief executive Peter Mountford.
“This position has maintained throughout the lockdown period to date.”
Patrick Pols, the managing director of United Bulk, which transports essential products such as fuel and LP Gas, also reports a 30 percent drop in loads.
Unitrans Supply Chain Solutions’ chief executive Terry Bantock reported on average Unitrans Supply Chain Solutions had experienced a 20 percent reduction in kilometres travelled when compared to the corresponding period in the previous year.
INVENTORY LEVELS
Surprisingly very few disruptions had occurred with inventory supply.
“The only significant bottlenecks experienced initially were difficulties and delays in removing imported essential products from ports, in particular Durban,” said Mountford. “Once these rules were properly communicated to the relevant authorities, this position corrected quickly”.
Pols said while the raw materials his company transports were available, the demand was low. “There is, however, a shortage of LP Gas.”
Bantock said Unitrans Supply Chain Solutions had experienced no disruptions in their internal supply chain and did not envisage any for the rest of the lockdown period in April.
“We do risk mitigation on an ongoing basis,” he said.
Results of the RFA’s recent Lockdown Survey indicated that the vast majority of trucking companies were already in a critical phase where they did not see themselves existing past the end of April in the event that the existing limitations were extended.
“Many institutions have noted that it will take between one to three weeks to get back to reasonable efficiencies - some even longer,’” said Kelly.
LOCKDOWN CHALLENGES
Mountford said Super Group’s operations running under the essential goods and services banners had performed well, but with large parts of the group not operational, cost optimisation and control had been critical.
“At this stage employees not working have utilised their annual and unpaid leave during the lockdown and our employees’ commitment to ensuring a strong Super Group post this pandemic has been incredible,” he said.
“Our major challenges will be to ensure that businesses are right sized and lean in coping with the reduced demand expectations for at least the remainder of Calendar 2020.”
Pols was concerned: “I am very concerned about the inflationary impact on the industry, because productivity from the supplier and the end user has dropped dramatically due to protocols and staff social distancing, hence less staff to do the job.”
INNOVATION
Lockdown has seen trucking and logistics companies introduce innovations and new approaches.
“We have adopted online meetings, using technology, with staff and clients and work a lot using dashboards,” said Bantock. “This has proven to be effective as a means of communication during the Lockdown period. Lockdown has also brought about savings in travel time and the associated man hours lost”.
Mountford said, “We have introduced a number of enhanced electronic trading platforms throughout the Group and in particular introduced a new virtual showroom solution enabling customers to view and "sit" in vehicles on the dealerships floor. Obviously stringent hygiene protocols aimed in particular at viruses such as Covid-19 have been introduced and this will manifest across product packaging, vehicle sanitisation and office hygiene.”
WAREHOUSING DEMAND SPIKES
As non-essential goods have been banned from moving, there has been a marked increase in demand for warehousing.
“The initial higher Inventory levels resulted in us leasing additional warehouse facilities in the short term,” said Mountford.
“This will normalise in the next few weeks and we will revert to our normal facility profile. Given the expectation of very poor consumer demand post the lockdown, we will have to ensure facilities do not get over-loaded as South African manufacturers come on stream”.
Bantock said Unitrans Supply Chain Solutions had also experienced increased demand for warehousing space over recent weeks from clients. In addition, both Super Group and Unitrans Supply Chain Solutions were assisting retail groups and charities with storage space and transportation for communities in desperate need.
MITIGATION MEASURES
Bantock believed that Unitrans Supply Chain Solutions ‘hands on’ approach had assisted the company to respond quickly to the ever-changing landscape and still provide customer satisfaction.
“We developed and implemented our strategy very early on and adopted a decentralised approach, within guidelines, whereby we empowered our business unit executives to develop and implement plans. As a company, we endeavour to be agile and have been able to adapt to change very quickly”.
Praising the efforts of the RFA during this crisis, he added: “The RFA has really come to the fore over recent weeks and assisted road freight operators with removing bottlenecks, clearing up misunderstandings, and keeping the lines of communication open between various stakeholders”.
The RFA anticipated that many jobs would be lost due to the lengthy time many businesses would require to get back to full capacity.
“The RFA has engaged with stakeholders to arrange the best possible mix of support structures for employees in the logistics industry, but we cannot carry this indefinitely,” said Kelly. “We need to be able to generate revenue to replenish both these funds and other employee benefits we offer for the foreseeable future.”
“The logistics industry needs to start functioning again to ensure that retailers are stocked as restrictions start to be lifted, ensuring that goods are available and that manufacturers have resources and materials available,” said Kelly. “In addition, consideration should be given to decongesting manufacturing spaces by moving finished goods and allowing for the gradual return to full economic activity”.