Strike halts African supply chain route

21 May 2010

25 May 2010 | Neil Oelofse

A pay strike by transport workers has severely disrupted South Africa’s rail and port network and weakened supply operations across the region.

Angola and Tanzania have been the  worst affected by the dispute, which has also hit Mozambique, Nigeria, Tanzania and Kenya, according to Terry Gale, of the business group Exporters Club.

“Exports to these countries have become a major problem. Angola is very closely reliant on South Africa because it doesn’t have a manufacturing industry; in Tanzania a hotel project is under threat because we can’t get the furniture delivered.”

And South African producers had been hit hard by the disruption, Gale noted. “The strike is affecting supply management in every industry and it’s going to hurt our economy badly.

“We can’t meet our deadlines and, as the world’s eyes focus on us ahead of the FIFA World Cup, we are harming our investment potential,” 
he warned.

The strike is alarming for a number of key industries, such as food and metals. The automotive industry, which relies heavily on rail and port networks for a continuous flow of production parts and finished goods, has been particularly affected.

Nico Vermeulen, SA director of the National Association of Automobile Manufacturers, told SM: “If the problem is not resolved quickly, it could become critical for some suppliers and temporary closure or scaling down of assembly plant operations could happen.”

And there are fears that continued delays could also damage South Africa’s reputation for international competitiveness and portray the country as an unreliable supplier.

Freshgold SA Exports, which ships fresh produce to overseas markets, said while the strike was causing unnecessary expenditure, its true impact would only be realised once the wage impasse had been resolved. “They have stopped loading containers at the docks,” said Freshgold CEO Gielie van Aarde.

“We have stock at warehouses and distribution centres overseas so supply won’t be affected to those markets, but the strike is costing us a lot of money,” he added, claiming cold storage was nearing full capacity and farmers could not harvest.

The SA Petroleum Industry Association said it had warned its members ahead of the strike to make contingency plans to mitigate disruptions to fuel supplies.

Eskom, South Africa’s power utility, said it would remain largely unaffected because coal to power plants moved via conveyor systems directly from the mines.

As SM went to press, the unions and Transnet were locked in talks to end the strike. Members of the transport unions, South African Transport and Allied Workers Union and the United Transport and Allied Trade Union, began their strike on 10 May, demanding a 15 per cent wage increase from South Africa state authority Transnet. Combined, the two unions represent 85 per cent of Transnet’s 54,000 workers.

The state-owned company has offered 11 per cent, more than double the current 5 per cent inflation rate.

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