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Transnet strike could cause shipping backlogs ahead of festive season

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The South African Association of Ship Operations and Agents (Saasoa) says any protracted industrial action by Transnet employees could see plant shutdowns and a scale down in productivity, which will be a detrimental outcome for the country’s economy especially ahead of the busy festive season.

Saasoa CEO Peter Besnard tells Moneyweb that each day that an approximated 80% of Transnet employees are away from their workstations will cause major shipping backlogs at the country’s ports and will cost the economy dearly.

Read: ‘The Transnet strike is going to cost the economy billions’

“From an economic point of view there are millions of rands worth of cargo on the water given the peak Christmas season that is upon us that may not end up on the shelves as a result.”

“Companies that are waiting for raw material, components to manufacture goods, cars etcetera will have to shut down their plants and put staff on short time. All in all, a terrible scenario [for industry],” he adds.

He stresses that “history has taught us” that it will take several months to recover from the impacts of a drawn-out employee strike at Transnet.

“The previous [Transnet] strike in 2010 lasted 17 days and took in the region of 7 months to clear the backlog [and] get things back to normal,” says Besnard.

On Monday, members of the South African Transport and Allied Workers Union (Satawu) – excluding essential service employees in port security and marine services – embarked on their leg of a wage-related industrial action, after members of the United National Transport Union (Untu) resorted to strike action on Friday, following failed wage talks with the state-owned port and rail monopoly.

Read:
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Transnet employees are asking for wage hikes of between 12% and 13.5%, the group has so far kept its wage offer at between 3% and 4% depending on employee grade level.

Jobs threat 

Commenting on the potential impact of the strike, both the Nelson Mandela Bay Business Chamber and the Cape Chamber of Commerce and Industry (CCCI) believe that the longer it takes for Transnet and affiliated unions to reach an agreement, the more likely that jobs in various industries will be lost.

“Over 127 000 people in formal employment in the Western Cape owe their livelihood to products exported through the Port of Cape Town, according to research conducted by the Western Cape Department of Economic Development and Tourism,” says CCCI President Jacques Moolman.

“A protracted strike would further disrupt volumes moving through the Port of Cape Town at a time when there are already delays.”

Nelson Mandela Bay Business Chamber CEO Denise van Huyssteen says local exporters cannot afford another hinderance to productivity as they are still recovering from the impacts of the Covid-19 pandemic, which saw global supply chain disruptions.

“Already, shipping lines are calling our ports less frequently due to the inefficiencies of our ports, and this strike may result in the continued acceleration of this concerning trend. In fact, the unintended consequences of this strike could have far-reaching implications for the country’s economy as a whole,” she notes.

“It further damages the country’s reputation, with global cargo operators likely to move on to other ports and further deprioritise South Africa from its routes,” she adds.

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“According to the SA Revenue Service approximately R343 billion worth of goods were imported and exported by South Africa during the month of August alone and of this 70% of goods were processed via the ports,” she says.

“This means that each day of strike action will effectively prevent trade in more than R8-billion worth of goods per day,” notes van Huyssteen.

According to Moolman, the Western Cape has seen several ship delays at its ports already, adding another stress factor to the province’s economy.

“The province this week reported five vessels currently waiting outside the port’s container terminals, with a further ten vessels expected over the next week.”

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