SA faces risks economic ‘collapse’ as Transnet strike hits ports with billions on the line
While Transnet has maintained that its terminals at ports have not come to a standstill, logistics businesses have warned of a catastrophic economic fallout if operations at the state-owned logistics giant’s ports in Durban and Cape Town face prolonged suspension.
As the strike by labour at Transnet gets into full swing on Monday morning, the industrial action has set off jitters that bottlenecks will occur at the ports, costing businesses and the economy billions.
The United National Transport Union (UNTU) and the South Africa Transport and Allied Workers Union (Satawu) served Transnet with notice of a strike, with UNTU kicking off its strike last Thursday and Satawu downing tools on Monday.
Meanwhile, Anglo American subsidiary, Kumba Iron Ore, warned that its production will be hit by the strike at Transnet. The company warned that disruptions would have an estimated impact of approximately 50 000 tons per day on production for the first week and approximately 90 000 tons per day thereafter.
Road Freight Association CEO Gavin Kelly said that as far as he was aware “there was no movement of trade” at the ports.
Anonymous port users were quoted in industry news site Freight News on Friday as saying that “nothing was moving” at the ports.
Transnet spokesperson Ayanda Shezi said on Monday while there were labour challenges, the ports were made up of multiple terminals with various owners.
“There are terminals that are owned by Transnet, and terminals that are owned by private sector operators. The current strike is between Transnet and its unions. This does not include private sector-run terminals.
“All private sector operated terminals in all the ports are operating at 100%. Ship movements from those is per the norm. Even the Transnet-run terminals have been handling cargo although at a reduced tempo. So it’s incorrect to say the ports have come to a standstill,” said Shezi.
However, Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso said in a statement that the mining sector has already lost an estimated R50 billion so far this year due to Transnet’s deteriorating performance and could have generated R100 billion in revenue if it were not for capacity constraints on Transnet rail and ports.
“The Transnet strike is going to cost the economy billions. It is going to set back our efforts to drive a recovery. It will damage government revenue, robbing it of the resources needed to provide poverty relief,” said Mavuso.
Mavuso said a strike at Transnet was “disastrous” not only to direct imports like the medical sector, and exports, like the mining sector but to the entire, interconnected economy.
“The unions have said the strike is indefinite and 15 000 workers are not going to be working today. Today all ports and freight rail are not expected to operate,” Mavuso said.
She said that there was some legal options to consider, including declaring port workers to be essential workers.
“Given the economic situation we are in, this is an option to seriously consider. Without ports operating the whole country could collapse.”
Western Cape MEC for Finance and Economic Opportunities Mireille Wenger said the provincial government would work to soften the blow of the strike on the Cape Town Port, as over 127 000 people in the Western Cape have formal jobs due to goods exported through the port.
“According to Transnet’s communication on Friday, there are currently five vessels waiting outside Cape Town’s Container Terminals, with a further 10 vessels expected over the next seven days. Ensuring that they can berth will be essential.
“The Western Cape government, through its Department of Economic Development and Tourism, has offered support in helping ensure that these BCPs are implemented and that affected businesses receive information so that exporters and importers continue to ship over this time,” said Wenger.
The South African Association of Freight Forwarders (SAAFF) CEO Juanita Maree said a strike at Transnet could kick off logistics delays to the supply chain costing the economy anything between R100 million and R1 billion per day.
“When calculating the total economic cost, the final consequence of the devastating impact is far higher than that. According to the latest SA Revenue Service merchandise stats, R343 billion worth of goods were traded by the country in August,” said Maree.
“If the country and the government do not have money now, they will have much less in seven days. The strike is throttling our economy to the point of no return. We need decisive, urgent action now,” Maree said.
She called on the government and labour to reach a swift resolution to the impasse.
Transnet and labour are set to meet at the Commission for Conciliation Mediation and Arbitration on Monday afternoon