Looking back on last year the TruckWatch forecast for 2006 turned out to be substantially right. 2006 was another good year for vehicle suppliers and the virtually all aspects of the trucking industry. Sales of new trucks grew more than 20 per cent off the high 2005 base before December 2006.

It was, however, a challenging year for roleplayers both in and around the business of trucking. Transporters and fleet managers had to cope with the tough challenges flowing from the huge and rapid rise in fuel prices that peaked at nearly R6.50 a litre in August. Even after the easing of the crude oil price from September to December, the year-onyear average price of diesel rose by 18%.

The high oil price pushed up tyre, steel and resin prices as well as those of new vehicles - the first price hikes in almost three years. Trailer and body builders had a good year but not at the same level as the year before. This was especially so in the case of refrigerated trailers and loadbodies both of which had a record year in 2005.

Based on market-related operating costs for a sixaxle articulated rig covering 160 000 km a year hauling a 30-ton payload, the owning and operating cost rose approximately 8,5% for the 11 month period January to November 2006. The operating cost estimate includes depreciation, cost of capital, licence and insurance, driver and crew wages, fuel, maintenance and tyres for a typical inter-city long distance transport operation.

The shortage of properly licensed, experienced, trained and reliable drivers is now sufficiently widespread to be regarded as a national problem needing urgent attention and proactive steps to contain a catastrophic situation that holds the potential to hamper the need to achieve seamless distribution and delivery of goods and services.

New entrants to the industry are becoming more visible. So far, too few are even basically prepared or equipped with an appropriate professional driving permit or understanding of transport fundamentals to secure the finance, guidance and assistance they need to succeed in the now fiercely competitive trucking industry. This especially so given the prevailing tight transport rates found in most construction related haulage tasks. New entrants, like any other aspirant transporter must possess a contract or guarantee to undertake work for at least 60% of the time needed to meet the periodic payments for a vehicle.

2007, what could it hold for transporters, fleet managers and suppliers? It seems that most analysts and commentators, with some reservations, suggest that this year will be much the same as the last two or three years in terms of our economic fundamentals, ongoing growth and development that is largely driven by the demand for FMCGs, improved agricultural performance due to good rains and the massive capital injection of more than 400 billion rands for infrastructure upgrades and improvement. The better than expected growth in the third quarter GDP and an annualised growth of some 14% for the construction industry are positive indicators that the economy is on track for another good year.

However, there are warning signs that ongoing consumer spending and the weaker rand are just two factors that are likely to bring about further hikes in interest rates that in turn could dampen demand and slow the economy down to a more pedestrian pace. While this is true some thought should be given to the improvement in job creation and the growth potential for the industries and market segments that support the broad construction industry. These are manifold  including bricks, sand, cement, timber, builders hardware, glass, aluminium, steel, wire and many more. All of which must be moved at least once or twice over the road. So yes, another good year for new truck sales and transport equipment of all types and sizes.

The influx of new makes and models will extend and enhance the tone and quality of the buyers market as vehicle and equipment suppliers vie for a viable slice of the market. The growing number of vehicles from Asia has already had a major impact on the used truck market as traders try to retain acceptable gross margins. Residual values across the board are likely to be carefully scrutinised at regular intervals in the year ahead.

The significant ongoing growth in the national truck parque has placed notable strain on the ability of franchise dealers to provide timely and competent service and maintenance facilities and resources at the disposal of the ever-increasing number of fleet owners and fleet size. This especially so with the increased demand for OEM maintenance contracts and the shortage of trained diesel technicians. It will pay transporters and fleet managers handsomely to seek out those vehicle manufacturer’s that have already taken steps to employ and train apprentices to ensure they and their dealers will have access to sufficient trained technical staff. Proper and timely investment in replacement parts is equally important if vehicles are to spend more time on the road. Make sure your service providers have enough time to help you with your problems and not just be bogged down trying to sort out their own problems. If you are in the market to replace or acquire more trucks and equipment give some thought to the vehicle manufacturers and dealers that provide service with sincerity; are willing to share the unused portion of a maintenance contract when it reaches full term; that train their sales staff to sell you what you need and not just what they have in stock. Look for sales reps that can demonstrate payload, performance and productivity, not just old price stock, discount and an over-allowance on trade-ins. Profitable trucking is about maximum legal payloads, acceptable average speed, worthwhile useful life and better than average fuelefficiency. 

All truck owners and operators can expect more focused and consistent enforcement of road traffic laws and regulations. By time this issue of TruckWatch is published at least one transporter will have had all or some of his operator cards revoked for habitual overloading. This means all or some of these vehicles are not permitted to carry a payload on a public road. In other words they cannot be used to produce income. This could be enough to bankrupt a business. The RTMC (Road Traffic Management Corporation) is up and running. The pilot project to "test run" AARTO in the Tswane area is underway. This means the implementation of the points demerit system for driving offences is not so far away.

There should also be cause for concern about some of the things that the Minister of Transport and his staff are talking about on various public platforms, this, especially when it infers the minister’s intention to lower the current permissible maximum GCM of 56 tons. The published reasons for wanting to impose such limitations on the all up capacity of trucks include protection of roads from further damage and the consequent cost of repairing and maintaining them to reducing the number of trucks on the road ease traffic congestion.

Inter-modal cooperation to optimise the strengths of road and rail makes good sense. However, a forced modal switch to give rail a bigger share of general freight transport is more likely to impact negatively on the CPIX and protract delivery times between imports, manufacturers and the vast wholesale/retail segment. All aspects of the road transport industry needs to hold hands in a united effort to lobby various government departments and the business sector to ensure that its vital role in underpinning the ongoing success of the economy is not misunderstood or just ignored to placate short-term subjective and expedient ambitions of Spoornet’s management. The formation of such a lobby should be actively involved in the annual national logistics survey to ensure the criteria is applicable to South and southern African conditions and circumstances and not substantially those that are applied to EU and US logistics. It is encouraging to note the RFA is finally articulating encouraging plans and projects it intends to implement that could improve its relevance as an important industry association. However, it needs much broader based and active support from across the road transport industry if a meaningful impact is to be achieved. This in particular from powerful roleplayers such as truck rental, construction, chemical, wholesale/retail, food and beverages and business services. It’s time for fleet owners to contribute a fee of a few hundred rand a year in support of a meaningful industry association that has the teeth to get the attention of government at all levels to resolve the myriad of regulations and amendments that are not yet finalised, implemented or enforced; to address the paucity of easy to access driver and other transport related training courses and get commitment to rehabilitate debilitated roads.

There is little doubt that 2007 will be a good year. It could, however, be a great year depending on the industry consolidates and applies its huge pool of resources, knowledge and experience. TruckWatch wishes each and everyone participating in this great industry, whether transporter, fleet owner, fleet manager, vehicle and equipment supplier or service provider, the best year yet. Lets hold hands and go for it.