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Past Issues

February 2010

INDUSTRY OBSERVATION

How can we assist?

If we accept that 2009 was one of the most challenging years on record for the South African road freight sector (never mind the rest of the economy!) what does 2010 hold for this strategic industry?

Our approach this year is to determine how we can further improve the service and support we offer to our clients.

That said, if you managed to take leave over the Christmas holiday season, we hope your batteries have been re-charged and you are ready for the year ahead. We wish that all your ambitions are realised, your dreams fulfilled and that the country prospers.

A notable highlight will, undoubtedly be the 2010 Soccer World Cup.

While a tournament of this size and stature is bound to have its fair share of challenges and setbacks, the good news is that, perennially, it is the transport industry that delivers the goods regardless of the circumstances, risks or threats. The 2010 soccer world cup will be no different. Transporters will do it!

Getting back to improving our service and support, we thought it might be prudent to kick off by offering some tips that may assist fleet operators in what is undoubtedly going to be another year of challenge for road transport.

Maintain your fleet - prevention is better than cure

Here they are in no specific order:

  • Cash flow If cash flow is tight, approach your broker beforehand. Most Insurers will endeavour to assist as much as they can with a structured financial plan.
     

  • Debtors collections As far as contract work is concerned, our experience is that so often the time from doing the work to debtors paying for the services rendered, (30 to 60 days and longer), is similar to putting a noose around your neck. It is only a matter of time before this noose tightens! I always try to advise clients to mentally carry out the following exercise: assume you are working for  an ‘unreliable’ payer. Assume your net profit margin is 10% per load. This means if that client ‘folds’ and doesn’t pay your account, this will cost your business the profit from nine loads just to recoup the write-off cost, never mind the foregone profit.
     

  • Insurance The agreed values of your vehicles: Review your vehicle values regularly to ensure you are not over-paying on insurance premiums. Remember the premium you pay has a direct correlation to the value of the vehicle. The more attention you pay to the values of vehicles, the more cost effective premiums will result.
     

  • Operations Routine maintenance. There is no question or argument that prevention is better than cure. Maintain your fleet regularly and properly or suffer the consequences.

Please feel free to contact us for clarification on anything you have read here. We really mean when we say that we are here to serve you, our clients. I would suggest all the underwriters who are in a similar position to proffer help and assistance wherever feasible, viable and required.

By Chris Barry, CEO of HCV Underwriting Management

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