Transnet strike will cripple SA

The Transnet strike will bring the economy of South Africa to its knees, experts are warning.

Lucio Trentini, CEO of the Steel and Engineering Industries Federation of South Africa (SEIFSA), warns that the strike comes at a time when the country is already struggling. “The stakes are higher than they have ever been. Our economy is under siege as it battles a job, growth, and hunger crisis. A devastating 63.9% of South Africans under the age of 24 are unemployed, consumer inflation is at a 13-year high and one in four people live below the food poverty line.

“A full-blown strike at Transnet, which seems unavoidable, will have a serious effect on the economy; it will halt exports and put thousands of jobs on the line. Under the current harsh economic climate, Transnet (as with Eskom) is crucial to the country’s economy. Transnet’s rail and port facilities are key to exporting the country’s bulk commodity exports such as coal, iron ore, chrome, and manganese,” he warns.

Juanita Maree, CEO of the South African Association of Freight Forwarders (SAAFF), agrees. “The ongoing impasse between recognised unions and Transnet is having a devastating effect on our economy – much worse even compared to the ongoing energy crisis! As we have learned during the pandemic, it is absolutely essential for supply chains to be maintained at all times. SAAFF’s research shows that logistics delays to the supply chain cost our economy between R100 million and R1 billion per day. These are delays in general, not strike-specific delays, however, when calculating the total economic cost, the final consequence of the devastating impact is far higher than that,” she warns.

Maree notes that, according to the latest SARS merchandise stats,
R343 billion worth of goods were traded (imports and exports) by the country in August. “If we consider that 70% of merchandise is processed via the ocean modality, the current inactivity blocks more than R8 billion worth of goods each day! Combined with the ripple effect, the impact is more than the country can absorb, given the current economic climate,” she points out.

Maree says that, coming from the perspective of the clearing and forwarding industry – the workhorse of making the merchandise trade tick – the following aspects are apparent:

• The economic extent of this action is not fully understood by decision-makers.
• The unintended consequences of the port strikes will be far worse than our energy crisis if left unattended, as the shock to our economy could not have come at a worse time.
• Neither Transnet nor labour seem to understand the full extent of the damage. Simply put, we cannot run on a contingency plan for any length of time, as the waterside and landside are too integrated and spill over into one another.
• A one-day loss in port activity results operationally in a minimum of 10 days of recovery. However, the economic loss has a ripple effect on the economy, resulting in further foreign revenue loss at a time when our balance of trade is steadily deteriorating. Therefore, losses will run into the billions per day.

Maree warns that the strike is throttling the country’s economy to the point of no return. “International trade remains an essential driver of economic growth and development – and importantly, job creation. Facilitating trade must take place on shared infrastructure via shared responsibilities from all parties. Any failure to facilitate trade has dire consequences for each and every South African!” she explains. “Against the backdrop of low growth, high unemployment, and rising living costs, we are doing an injustice to ordinary South Africans by leaving this catastrophic situation unattended. Collectively, SAAFF calls on government and labour to reach a swift resolution to the current impasse, as the time is ripe for decisive leadership on behalf of all constituencies.”

Trentini would like the same. “A full-blown strike at Transnet will add to the damage suffered by the South African economy. This will be as bad as load-shedding in terms of economic impact. For an economy battling to maintain momentum this could well be the final nail in the coffin. We appeal for a constructive approach that seeks to advance the interests of our country,” he implores negotiators.

“We know that it will not be easy to make compromises, but we appeal nevertheless for a win-win approach to the negotiations, as opposed to a winner-takes-all approach,” Trentini continues. “Our plea to all the negotiators, and to those from whom they obtain their mandates, is that you rise above your narrow interests and put the interests of the South African economy first, and look to settle quickly.”