Mass looting in KwaZulu-Natal and Gauteng, as well as the wanton destruction of trucks and goods, has damaged the wholesale and retail sectors and their distribution centres in these provinces.
The Road Freight Association (RFA) in a statement on July 14 pointed out that 80% of South African goods are carried by road, so when trucks stop, South Africa stops.
RFA CE Gavin Kelly believes there is an imminent possibility that opportunistic looting will spread to other provinces. He adds that what started out as sporadic incidents on one or two routes has now spread to the entire supply chain, affecting the transport legs in all forms, as well as destinations and organisations.
The economic impacts of damaged supply chains are far-reaching, but the collapse of the supply of all goods will be the immediate result.
Kelly mentioned that it would be the consumer that foots the bill for all the destruction, through indirect charges relating to the cost of logistics, the need to build reserves to repair broken infrastructure and as goods become scarce.
This while the looting and destruction of retail points will force closures for damages to be ascertained and for repairs and restocking to be done.
Kelly said some companies have already indicated they will not reopen and the job losses in this regard will be huge.
“What cost are we looking at? The cost to operational assets (vehicles and infrastructure) is just the tip of the iceberg – and as reports come in, this will grow exponentially. We are already looking at billions of rands in the total logistics supply chain - without factoring in the damages to commercial retail space,” he pointed out.
He added that the costs to commercial retail and other related damage will be phenomenal – and the impact on the investors and owners of these facilities has not been factored in, as yet.
The cost to families and communities where jobs will be lost, will be crippling. Millions will be lost in salaries and wages – but more importantly millions of people will become destitute. The long-term implications of this have not been factored in yet.
The damage to the South African economy will run into billions of rands, as business confidence drops, foreign investment plummets or is withdrawn, and those who use South Africa as a transit hub, turn away from us and move to other countries that are safer and more efficient.
Kelly has appealed to President Cyril Ramaphosa to declare a State of Emergency and to swiftly restore law and order, including by dealing harshly with perpetrators and instigators.
CASE IN POINT
Kelly noted some examples as to the damage that is being done to the economy and companies.
Depending on the category of vehicle, the type and value of cargo, and the specialised equipment required for the cargo: this can be anywhere between R3-million to R10-million per vehicle.
A simple calculation of capital losses (assets and cargoes at an average of R5-million per vehicle) of the 40 trucks destroyed to date amounts to around R250-million to R300-million.
This is notwithstanding related costs such as insurance that will increase alongside these losses.