THE DEFINITIVE TRUCKING SITE

October 2008

Jo Grové, CEO of Unitrans Holdings, is a tall man in every respect – stature, integrity, honour, humility and knowledge. While operating in powerful boardrooms and business circles, he makes it his business to stay in touch with the daily realities of trucking as played out 24/7 on the streets far below the heady confines of the corporate environment. As such, he is not your average CEO. Rather he is a real trucking CEO who talks the realities of trucking rather than just the figures of trucking. In this face-to-face interview – being run over two issues - Patrick O’Leary gets Grové's views on a number of issues facing the industry today.

Power Broker Jo Grové, CEO of Unitrans Holdings, is a hands-on, street-wise trucking ‘boykie’ who not only excels in running the boardroom issues of this successful diversified transportation, distribution and logistics, motor retailing and car rental company but also has his finger firmly on the pulse of the challenges, issues and daily grind of South African trucking.

JG: Very good in fact. We’re not in commoditized transport so we’re not involved in long haul trucking or in cross border trucking. We’ve avoided this sector as you are susceptible to the guy who undercuts rates. Rather, we’ve positioned the business around supply chain solutions where we see transport as one part of that supply chain. 

In this sector, we enter into true partnership arrangements with our customers and this partnership is not something we simply pay lip service to. You’ve got to work with your customer otherwise you can’t get the collaboration we strive for. We manage all aspects of that supply chain which allows us to look at all areas where there’s room for improvement. 

And it’s paid off as we have long standing relationships with customers like Rainbow Chickens. For as long as I’ve been at Unitrans, they’ve been a major customer of ours. And that business is rapidly expanding. It’s good for us and we can’t let them down. We’re a critical part of their business. As for rates, we’re more than happy with the money we make from our customers. At the same time we are giving a very good service. 

It’s a win-win scenario. Generally speaking, if you looked at our total fleet, I would say that at least 80% is involved in local distribution - probably closer to 90% - which is linked to dedicated contracts. In long term contracts, we’ve hitched the asset to the term of the contract. We’re also heavily involved in fuel haulage operating some 900 vehicles in the Dangerous Goods arena.

JG: We’re fortunate in that we negotiate with our customers upfront on the basis that we can’t control the diesel price. So we build that into our contract and if the fuel price is hiked, this is passed on in terms of the contract. We’ve been on the road and said to the customer, I’ve got this fleet of trucks running down the highway and the fuel price has just gone up and I’m going to be filling up tomorrow morning. Our contract allows us to adjust the price accordingly. But there’s a lot of trust involved which comes from open and honest negotiations upfront. 

Driver Power Say hi to driver Johannes Mosia. Unitrans does not employ any driver in the Dangerous Goods environment who hasn’t a minimum of three years experience – and then he is still trained further on DG driving. Grové sees a fuel truck as a mobile bomb and thus all rules are followed and obeyed without exception.

FW: We saw during the year a number of smaller companies not being able to pass on the fuel hikes. Is it easier for a company like Unitrans with its large infrastructure to manage the vagaries thrown at it? 

JG: Generally speaking, the smaller operators are fairly highly geared. They rely on bank credit, they don’t have large capital reserves at their disposal and then they get hit with fuel and interest rate hikes. It makes it tough for them – and especially for those involved in the cut-throat long-haul business. There are, however, those players who make a success of it. Those are the real entrepreneurs who live, eat and sleep their businesses, live out of workshops, know exactly which truck is where and manage their cost base absolutely efficiently. The problem comes when a fleet grows beyond the 40 or so mark and the owner does not put in the necessary infrastructure to support that growth. As the company gets bigger, you need strict controls and often they’re not put in place. In the ten years I’ve been in this game, I’ve seen guys create a good little business and when they take it to the next level without growing the infrastructure, they hit trouble. If you grow your business, you’ve got to have the infrastructure to maintain that growth. 

FW: There are many factors working against transport today - crime, diesel price, high interest rates. What’s adding cost to transport? What do you have to deal with? 

JG: The biggest cost factor we deal with today is accidents. That’s a major, major cost. Sure people say they’ve got insurance but the insurance companies work out your claim rate and then your premiums go up accordingly. So training is a massive thing. Unitrans has spent many millions of Rand on training but, as an industry, I don’t think we spend enough time on disciplining and training drivers in this country. I’ve always advocated having a drivers’ academy. There are some starting to come about and I think that’s good but people are stretched trying to make a buck and they’re not investing in training. I think that’s a major problem facing this industry. The biggest added cost in transport today is accidents. There’s no question about it. 

Another big problem is the number of unqualified drivers on the road – and I’m not only talking truck drivers. There are hundreds of car and taxi drivers who have bought their licenses and who are causing a lot of the accidents. This has led to the industry coming in for a lot of criticism  because it seems whenever there’s a major accident, there’s a truck involved. However, if you do a complete forensic investigation of every accident – as we do – you often find it is not the truck driver’s fault. There are many accidents where someone else has behaved badly and created that accident but the trucking industry gets the rap for it. I think the industry is getting a bad name unnecessarily with the result that some ridiculous suggestions have been made to take trucks off the roads at certain times. For heaven’s sake, do that and this economy will grind to a halt! You can’t do that. It’s crazy! 

FW: Staying with drivers, we’ve got an HIV&AIDS problem that has decimated the ranks of the drivers; we’ve got young guys coming in who are untrained and inexperienced; we’ve got a shortage of truck drivers and a booming truck market. What’s the answer? 

JG: I don’t know the answer straight out. I know the RFA are trying as best they can to educate the new operators into the industry; trying to tell them what the dangers are and explain to them what precautions they should be taking. But anybody who owns a fleet of trucks has got a massive responsibility in terms of the way their people drive and behave. I think there’s a general lack of that responsibility. It’s like the godparents of the taxi industry should take responsibility for the taxis. However, if you don’t have an ethos and you don’t have a culture of discipline where your drivers behave according to the rules then, with the best will in the world, you will have trouble. 

We, for example, do not employ any driver in the Dangerous Goods environment who hasn’t a minimum of three years experience. And then we still train him in Dangerous Goods driving. A fuel truck is a mobile bomb and you have to be very careful. Whether you’re a two-truck operator or a two thousand-truck operator, the rules apply to all of us. 

Retail Outlets The Williams Hunt dealership in Fourways is one of the 72 retail outlets falling under the Motor and Financial Services division of Unitrans. The market coverage ranges from the entry-level passenger car to the heavy truck market and embraces customers from the individual private buyer through to major national fleet operators.

JG: You shouldn’t be in the industry if you have that sort of approach. You cannot possibly be in the industry if you don’t accept the responsibility that goes with it. 

FW: There are also those who say because of low rates, they have to overload to make a profit. Is this a valid excuse for overloading? 

JG: Again, you shouldn’t be in the industry if you have that approach. We would never enter into a contract where we have to overload the vehicles to make a profit. That might sound arrogant because people will say, hey, you’re a big company and you can afford to do that. But we’ve got a responsibility not to overload - as a public company and more so because we’re so visible. Our brand is out there so we can’t afford it. We have a major responsibility to other road users and we’d better make sure our trucks are operating legally, that they are roadworthy and that our drivers behave in an appropriate fashion. 

Fuel Carriers The Fuel and Chemical division of Unitrans is focused on providing specialised transport and logistical solutions to the petrochemical and gas industries. Areas of operation include South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe, Zambia, Mozambique and the Democratic Republic of Congo.

FW: What I have seen through our various Brake & Tyre Watch exercises is an abrogation of the responsibility you talk of. There are a lot of unroadworthy trucks out there. 

JG: I agree with you 100% but I think the way we would approach that is that if one of our trucks was removed from the road for any roadworthy issue or any overloading issue, there would be a major consequence for the guy who ultimately operates that vehicle. And that’s not the driver. That’s the manager – the depot manager or the contract manager. We would have a disciplinary hearing to find out what went wrong; to find out how that vehicle was allowed to leave the depot. 

Certainly you can leave with a truck that is perfectly roadworthy and you then lose an indicator light on the road. 

I understand that. But when a vehicle is on the road and hasn’t sufficient braking systems and the hydraulics are not working properly or whatever, that is absolutely unacceptable to us. There would be a major consequence in our organization for that. Hell man, I could be one of the victims. Putting unroadworthy trucks on the road is just not an option for us. 

FW: Which brings us to the subject of law enforcement – or the lack of it. What’s your opinion on this? 

JG: I think it’s not nearly strict enough. I think John Schnell, head of the Traffic Inspectorate in KwaZulu-Natal, is a fantastic guy. Vehicles drive differently in KZN because they know there’s a policy of zero tolerance. He’s created an environment that says we don’t tolerate nonsense here. Now that’s leadership and I admire him for that. But unfortunately, it doesn’t apply in a lot of other provinces. Another problem is the corruption in the police force. It’s unacceptable and is a major problem. 

 

Avoiding Longhaul By positioning the business around supply chain solutions, Unitrans has avoided the long-haul commoditised transport arena where transporters are susceptible to rampant rate undercutting.

FW: On the subject of the skills shortage plaguing the industry. TETA was put in place to provide a skilled labour force. Why then is the industry suffering such a skills shortage on almost every front? 

JG: I think there have been some benefits to TETA but the problem is they are driven by tax breaks rather than by being there for the good of the people. Stopping the apprentice system in this country has got to have been one of the biggest mistakes anybody has ever made. We, as are most operators, are struggling to find decent diesel mechanics. It needn’t be this way. If there was an apprentice system for the guys, we could take unemployment by the scruff of its neck and shake it. Not everybody can be a businessman; not everybody can be a doctor or a dentist – and not everybody wants to be. With an apprentice system, we’d give a guy the opportunity to become a tradesman – a diesel mechanic or any one of the trades. The guy could make a very good living, have a responsible job, take care of his family and live in a decent home. And they’re in such demand today that they could almost fix their own pay. I think, overall, TETA hasn’t been a success and what’s happened is that industry and business has been forced into taking the responsibility for tackling the problem themselves. But there are small operators who just don’t have the resources to do that. It’s all a bit of a disaster.q 

 

Editor’s Note: Due to space constraints, the balance of the interview will be continued in our next edition. Watch out for it. There are some interesting subjects being discussed.