With the cost of doing business set to increase in Gauteng with the commencement of E-toll tariffs, Gerrit Prinsloo, Director and Transport and Logistics Specialist at SizweNtsalubaGobodo says that because Gauteng is the only major industrial centre in the world not situated on a waterway, the relative location of points of production and points of consumption make South Africa more dependent on land freight transport than most other countries.
“The 9th State of Logistics™ survey for South Africa 2012 indicates that logistics costs as a percentage of total GDP have risen by 0.7% to 12.6% in 2011 and are estimated to have risen further to 12.8% in 2012. The impact of E-tolling on this particular industry alone is therefore huge,” he comments.
Prinsloo says that while transport business owners will undoubtedly be faced with the short-term challenge of incorporating the additional cost into their pricing models, they already are and will continue to reap the benefits of increased efficiencies in the transport sector due to the increased road capacity.
“Because transportation costs increase when the transporter has to budget for inefficiencies due to traffic congestion, the additional capacity on our roads is therefore already benefitting transporters through providing access to increased efficiencies. So in effect once toll tariffs are implemented, only then are businesses going to start paying for the increases in travel costs which will have already been absorbed by the increased efficiencies provided by the new national road system,” he explains.
Prinsloo says increased traffic management intelligence from billing data as well as potential data becoming available from the E-toll system will allow transport business owners to streamline their operating models and routes.
“Information that predicts bottlenecks and congestion will allow for re-routing and thus promote accurate scheduling and network optimisation. Businesses however will be required to rethink their business model and behaviours to shape and sustain more efficient behaviours that optimise supply chain management. For example receiving goods during off-peak periods could dramatically reduce overall transport costs,” he says.
However despite certain advantages, Prinsloo says business owners still face the grim challenge of having to incorporate the additional cost passed on by transporters into their pricing models without hurting the bottom line or compromising their service levels.
“Once SANRAL has announced the finalised E-toll tariffs, businesses will have to move quickly to compare the various advantages and disadvantages inherent in changing their current behaviours. Potential changes to routes, travel times and the location of distribution facilities all need to be taken into consideration, and ways will need to be found to strategically absorb these additional costs into their pricing models. Ultimately businesses need to start thinking smart about travel and transport,” he concludes.
