How do transporters survive? 
“Let’s not forget the market sets the rate,” says Etuan van der Westhuizen, MD of Hestony Transport, the successful and respected Free Statebased transporter. Etuan emphasises the need for careful and consistent control over all transport and related costs. 

“Make sure every member of the staff fully understands that customers must have a reason why they do business with your company”. The reason why, says Etuan, largely resides in the company’s ability to add value to the services they offer and provide. Success can be measured in the level of customer retention over long periods and ongoing growth in the client base. 

Fast ‘n Fresh MD Gavin Wilson says, with some relief, that volumes are slightly up after the annual sluggish May to July period. He is cautiously optimistic that the coming peak season will not disappoint. Fast ‘n Fresh confirms the benefits of disciplined operating standards and controls which it shares with Woolworths. 

Wilson says he sympathises with the transporters who are struggling to make the grade as a result of energy costs and high interest rates. The company is actively seeking alternative solutions to improve fridge energy costs. Like other ‘on the ball’ transporters, Fast ‘n Fresh is critical of shippers and retailers who are just not coming to terms with backdoor delays. “It is extremely expensive and unfair to transporters,” says Wilson. 

Van der Vyver’s Charl Kruger says it is time to address the need for sustainable rates that allow transporters to keep equipment for five to seven years and actively control costs. An important point Kruger raises is the problem of continuity of loads which needs to be addressed. 

On this, he points to the fact that during the November and January period, there is an under-capacity of 30% to cope with the demand for transport. This contrasts with a 40% over-capacity between April and November. Kruger believes there is room to improve this imbalance that would contribute to establishing sustainable rates. 

Like all the businesses we spoke to for this article, there is deep concern over the shortage of drivers. Concern is also expressed at the poor attitude and lack of commitment displayed by many of the younger newcomers to the job where it is evident that they have no diesel in their veins and lack pride in the work they do. 

Aspen’s Sujen Pillay emphasises the need to negotiate with shippers and retain tight control over all aspects of fuel, including theft. Experience shows that even good drivers will steal fuel or participate in card fraud if management leaves the door open. 

HFR’s Hein Schaefer says rates are just not market related. This he says is a major factor in forcing transporters to reduce the size of their fleets or even their businesses. HFR grew rapidly during recent years. Having hauled for a number of large shippers across the country, he is well-placed to comment on this widely held view. 

It is time to address sustainable rates that allow transporters to keep equipment for five to six years and to actively control costs.  Charl Kruger, Van der Vyver Transport

Company-owned fleets
Company-owned fleets were the major buyers of replacement or additional refrigerated rigid vehicles during the year to date. 

To meet the growing demand for frozen or fresh perishable products, companies like Vector Logistics, with its expanding client base and product basket for its major principals, are finding the 14-pallet, 6 x 2 rigid vehicles an ideal solution for contributing to cost-effective refrigerated transport. Given the right product mix, these vehicles achieve a 40:60 frozen or fresh to ambient product ratio. This is a much better payload utilisation than the traditional 8-ton chassis frequently found operating with a 25:75 frozen or fresh to ambient product ratio.

However, waiting to unload remains high on the list of problems to be eliminated. In some respects, the time lost has increased due to additional procedures introduced at many backdoors to curb consignee staff pilfering. 

As a general perception, retailers are reluctant and even hostile in their willingness to accept a fair share of current transport costs. Where this is so, they need to step up to the plate and assist their suppliers and transporters to at least reduce these costly and largely avoidable delays. 

“If Woolworths can consistently achieve it, why can’t any of the others?” say transporters and transport managers. 

Fleet managers express similar views when it comes to driver attitudes and availability. Pietman Bell at Darling Dairies reports some success with training young incumbents from scratch. 

Learner drivers are given eight weeks on-the-job training with an experienced company driver who lets them drive around the town to familiarise themselves with driving and traffic. After this period, they apply for a learners licence. Three to four months later they take the test – and not all pass the first time. After another three months, most are ready to drive solo. This is an expensive and courageous system that helps to keep the complement up to strength. 

Where to Now? – Scenario
Shippers expect industry best practice from transporters using state-of-the-art equipment to ensure on time collection and delivery, protection of product quality, guaranteed cold chain standards and traceability.

What then are shippers and retailers prepared to do to ensure that professional refrigeration transporters with a proven record can maintain stable and growing businesses to meet the increasing demand for perishable products both locally and for export? 

There can be no doubt that refrigerated transport rates are lagging and traditional problems that can only be resolved by improved collaboration remain under the heading of “hell is paved with good intentions”. The scenario that follows is not just a catchy little by-play to illustrate a point. It is reality as described in their own words, by every transporter and fleet owner I spoke to. 

Enter “Reliable Refrigerated Transporter (RRT)” offering shippers optimum legal payloads with better than average payload to gross combination mass ratio. Also offered is guaranteed delivery within specified time slots based on the efficient performance of correctly spec’d trucktractors to achieve acceptable average speeds and fuel consumption and an equally spec’d fridge unit complete with microprocessor to control real time temperatures. Also thrown in is a trained and experienced driver to ensure safe loading, unloading and that all related matters are correctly carried out. All this is supported by a GPS tracking system. 

To achieve this, RRT invests more than R2-million in the equipment required to do the job as outlined above. In addition, RRT has a pool of drivers consistently being trained on the job as well as other human resources to control and manage maintenance, routing and scheduling and make use of the management information to focus on areas where further improvement can be achieved. 

For this to take place and be sustained, there is a realistic rate to charge if all the costs are to be recovered and a modest profit be earned. Depending on the route and other aspects, the rate for a 28-pallet Reefer should be in the order of R17 000 to R18 000. Shippers are doing their best to drive this down to R12 000 or less when regular loads are assured. 

Along comes “Fly by Night Vervoer” (FNV) who bought too many vehicles and now battles to find enough work to cover the fixed costs. FNV offers the shippers his vehicles for R11 000. 

The shipper accepts the offer but on a trial basis only to test FNV’s ability to meet the standard they are accustomed to. Shipper lambastes RRT accusing them of ripping them off and refuses to have an objective look at current truck operating costs. 

Outcome
In due course FNV fails the test, sells some vehicles, closes a depot or two and fires several drivers. FNV then goes on to the next prospect or goes belly up. In the meantime, RRT suffers significant damage to the financial stability of its business, profits dry up, the overdraft increases and for an unforeseeable period, less work is secured. 

The moral of the story: insufficient understanding of truck owning and operating costs – or just plain ignorance – jeopardises the entire road transport industry with potentially serious consequences for the economy.

What needs to be done?
To protect this vital aspect of the road freight industry, shippers in particular and transporters in general need to take meaningful steps to find a basis of agreeing on sustainable freight rates. This requires a mature approach and attitude to resolve the problems that have, for too long, created the climate for such damaging outcomes. 

A mature approach requires commitment and determination to establish a climate to sustain rates, levels of service and mutually beneficial long term business relationships between transporters and shippers. The objective should include: 

• Shippers making sure they  and their staff have a proper understanding of truck owning and operating costs. It is clear that too many people responsible for loading vehicles and unloading at the backdoor do not understand the significance of these costs. 

• Recognise the value of proven service, reliability and reputation.  

• Encourage and participate in transparent rate negotiations. 

• Refrain from accepting offers that are clearly below cost and unsustainable. Be aware of the risks attached to supporting financially unstable and irresponsible transporters. T

• ransporters and fleet owners must motivate the rates they seek. No sensible business person denies a reasonable return on assets. 

• Demonstrate an ability to control costs and add value to services they offer. 

• Meet regularly with shippers to agree rate increases or decreases based on objective benchmarks and factual data. 

Reluctance or refusal to face up to the need for a mature approach to establishing realistic and sustainable rates as well as – for once and for all – resolving the long delays at the nefarious backdoor, increases the risk of driving more transporters out of the industry to the point of creating a lack of refrigerated transport capacity that becomes available only to those who can afford to pay a much higher rate. 

Perhaps its time for the refrigerated transport fraternity to establish a representative body of its own to facilitate a more transparent relationship with shippers, retailers, et al. What do you think?