Costs still straining transporters

TOUGH economic conditions continue to take their toll on the transport industry as some operators are battling to grow due to high costs and shrinking operating margins.

Toni Fritz, Head of Vehicle and Asset Finance – Business at Standard Bank, says during a recent transport roundtable discussion, we asked a range of transport operators what issues were currently putting pressure on their businesses and this is what was gathered
Taking the lead in tackling road carnage

The industry is constantly burdened by road accidents due to a number of factors ranging from poor road conditions, non-roadworthy vehicles, speeding and reckless driving amongst other factors.

Fritz says that transporters agree the industry needs to work together to identify solutions for dealing with this problem. One of the solutions identified is the Road Traffic Management System (RTMS) a home grown voluntary, self-regulation scheme that encourages transport operators to implement a management system (a set of standards) that demonstrates compliance with the road traffic regulations and contributes to preserving road infrastructure, improving road safety and increasing productivity.

Because RTMS is self-governed and regulated by transporters, it is still being taken on at a much slower pace since the buy-in is often influenced by the perceived value. “Given the benefits, there is merit for transport operators to consider going into RTMS, but the costs, time as well as infrastructure requirements often discourage transporters,” says Fritz, adding that from a long term point of view the offset is that RTMS will eventually pay for itself – the challenge is getting transporters to this point.

Driver training

“The problem of being able to attract good drivers always drills down to costs. You attract better drivers if you pay well. Then of course there is the ongoing threat of good drivers being poached by international companies.”

Fritz says that transport companies should consider creating their own pool of skilled drivers. Big vehicle manufactures and a number of private companies do offer driver training in South Africa, but this is still not enough to solve the challenges faced by the industry.

“Addressing the driver training issue effectively will require public – private collaboration. This would entail creating an academy – making sure that the model is backed and funded equally by multiple suppliers. We need to come together and create an academy that will offer training and accreditation solutions to the industry as a whole.”

Developing good drivers also requires changing their behaviour. We have found that incentive programmes can a go long way in driving good behaviour within organisations.

Telematics also come in handy when tracking good behaviour, but often at a cost. Fritz says investing in good telematics is what transport companies should look at doing to attract, help record, monitor and incentivise good drivers.

Fuel and maintenance

Rising costs resulting from fuel and maintenance are the biggest issues that are currently keeping transport operators awake at night. These two issues are really driving pressure and have led to some operators believing that the industry is becoming saturated – since it is very difficult to drive growth in the tough economic conditions.

Fritz says the industry can learn a lot from well-established operators that have invested a lot of time and resources in implementing strategies and policies to lower costs. Some of the strategies that these operators have put in place include, pre-buying fuel (to get discounts), route optimisation, regular maintenance, tyre pressure maintenance and payload optimisation etc.

“What was evident from the roundtable discussion is that things are not going to get easier. Therefore, transport operators, both large and small need to start working more together and developing long term strategies to manage rising costs, road carnage and retaining skilled drivers, amongst other factors,” concludes Fritz.