October is the time to celebrate the key role that transport plays in the economy. Given the events that unfolded in July, safety has to be a concern we should highlight this year.
By Jason Mellow, Head of MiWay Business Insurance
Road transport plays an essential role in our national supply chain, especially now that the rail network is, at best, vestigial. Road networks carry some 80% of South Africa’s goods[i], ingoing and outgoing, and thus anything that disrupts road logistics is bad not only for the individual logistics companies but the economy as a whole.
The COVID-19 lockdowns placed logistics companies under huge strain, and the recent unrest has worsened an already bad situation with transport vehicles being targeted, most notably at the Mooi River Toll Plaza, on the vital transport corridor from the Port of Durban to Gauteng.
The figures make for unhappy reading. Between 2019 and the attacks on 10 July 2021, 1 400 trucks had been looted and/or burned on South Africa’s roads. Between 10-14 July, 40 further trucks were destroyed, an estimated loss of R250 million-R300 million, excluding the value of the cargo, which could represent anything between R3 million and R10 million per vehicle[ii].
In many cases, drivers have been intimidated, injured or even murdered.
Even more damaging to the economy, many of these vehicles will not be replaced and smaller logistics companies will simply go out of business, leading to a loss of hard-to-replace jobs.
While the July unrest hopefully represents an atypical situation, there is no doubt that the health of our logistics network is one that needs decisive intervention. South Africa, for example, has the dubious distinction of being the African country with the highest incidence of cargo theft, and is high on the international rankings for the prevalence of cargo theft.[iii]
Some measures that could be put in place to mitigate the risks faced include:
• Better driver training and wellness programmes. Drivers are the lynchpins of the logistics network and they need to be better trained in both driving and vehicle maintenance. Additional training should include how to respond to dangerous situations. It is also important that logistics companies verify their drivers’ existing qualifications.
• Predictive maintenance of vehicles. Stationary trucks are a common sight on our roads. Late deliveries can incur penalties, and a stranded vehicle is always a target for opportunistic looting. The advent of a commercially viable Internet of Things, backed by access to high-quality, cost-effective artificial intelligence, can deliver powerful predictive maintenance solutions to drastically reduce the chances of machine failure. An intelligence maintenance programme will also prolong the life of vehicles.
• Policies to govern transport principles for the company. Companies can drive better practices by setting out a clear policy environment relating to, among others, overloading, driver conduct on trips and the like.
• Risk management. MiWay’s top tip for any business, and particularly for logistics companies, is to put in place a formal programme of risk management. Such a programme will ensure that the company understands its risks and takes appropriate measures – it’s easy to overspend or to spend on non-essential things. As part of risk management, it is advisable to track all incidents (not just claims) in order to identify trends in your sector or area, and also to pinpoint any areas within the company that need strengthening.
• Anti-theft measures. It may seem an obvious point, but the securing of cargo areas should be a priority with a protocol in place for the type of locks used, and who has keys. Theft in motion is a growing trend, too – if this is a risk, measures to make it difficult to access the vehicle while it is moving should be adopted.
• Insurance. Insurance has an important role to play in mitigating risk. Companies should work closely with their broker or insurer to get the right policies in place, and care should be taken to understand them. Policies should be aligned with the risk management plan.
The road transport network is the blood system of the economy, but it does face challenges. Let’s use Transport Month to make sure our logistics companies are as secure and safe as they can be.
MiWay is a licensed non-life insurer and Financial Services Provider (FSP 33970).