Threat to supply posed by strikes in South Africa

23 February 2011
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Strikes in South Africa have become a significant risk to supply chains, research has concluded.

Protracted labour disputes feature as one of the major risks to supply chains, and are 2.5 times higher than the world average, a study by Imperial Logistics and the Association for OperationsManagement of Southern Africa found.

Marius Swanepoel, CEO of Imperial Logistics, said: “We acknowledge that strike action is a fundamental right within the South African regulatory context. It is also important, however, to consider the negative impact that protracted labour negotiations have on South Africa’s economic performance.”

Last year's Transnet-related strike action by the South African Transport and Allied Workers'Union and the United Transport and Allied Trade Union led to major companies being unable to supply customers, the report found.

“Some shipping lines were required to divert vessels from Durban, which resulted in the delay of imports and exports and in some cases, cancelled orders,” Swanepoel said. “The survey validates the fact that protracted strike action is perceived to have serious implications for an economy, just as wage negotiations that run smoothly can have a positive impact for South Africa on all fronts, from individual remuneration to economic performance.”

Meanwhile, the South Africa survey found other risks to supply chains were also higher than the rest of the globe. Extended loss of electricity, employee theft and “executive misdeeds” are all fives times higher.

The report is part of the MIT Center for Transportation and Logistics Global Risk Survey, which explores supply chain risk attitudes and risk management practices in 70 countries.

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