South Africa will take up to 9 weeks to recover from crippling Transnet strike

There is some good news for South Africa as the devastating strike at Transnet – costing the country’s economy billions daily – seems to be coming to an end after United Transport & Allied Trade Union (Untu) agreed to a three-year wage deal on Monday (17 October).

Untu represents just over 50% of the workforce at Transnet, while another estimated 20% are not unionised. The transport group’s CEO Portia Derby says that it saw a 70% to 80% representation back at work on Tuesday (18 October).

However, the last remaining union – the South African Transport and Allied Workers Union (Satawu) – is holding out, saying that its members have made it clear that until they get a no-retrenchment clause and what is due to them, the strike will go on.

Despite this, Derby said that Transnet expects operations to be at full tilt by Thursday (20 October), adding that if workers do not return by then, there will be a “no work, no pay” policy in effect.

“What we’ve done is given all of our workers a reprieve to get back to work by Thursday, seeing as some of them might have travelled far as a result of the strike,” she said in an interview with 702.

Derby added that the Transnet strike lasted just over a week, considering it was staggered with Untu kicking off before Satawu did.

Nevertheless, she recognised that the strike had created substantial backlogs both at ports and for rail, adding that the backlog at the ports is the biggest challenge – which will require six to nine weeks to clear.

In a statement released on Tuesday, Transnet said that at the ports, the focus remains on clearing the backlog of vessels at anchorage and alongside the quay – including bulk, break bulk and containers.

Evacuation of imports out of the port is underway to create fluidity within the terminals, with the immediate focus being on perishable and time-sensitive cargo. All eight commercial ports remain accessible, Transnet said.

However, Derby noted that there are ports where the backlog becomes more difficult because the yards where containers are kept are full, with more to allocate, which presents an issue.

“So the port terminals are where a lot of hard work is needed to be done over the next couple of weeks,” she said.

She added that Transnet Freight Rail (TFR) would require around 24 to 48 hours to clear the backlog – with an additional three to seven days to catch up on the critical flows.

“The real problem is that time lost is time lost in the case of TFR in particular, and we will not be able to make up for the lost time this year,” said Derby.

The prolonged strike action at Transnet has had a devasting toll on the economy, with the company essential to South Africa’s export and import industry. Valuable commodities like iron, coal and other ores have not been able to move through the ports.

The Minerals Council of South Africa said last week that the strike had cost the mining sector R6 billion a day, compounded on top of the R50 billion already lost by previous failings.

According to data cited by the South African Association of Freight Forwarders (SAAFF), supply chain logistics delays have cost the economy between R100 million and R1 billion each day, but the overall cost “is substantially greater than that.”

According to a Bloomberg report, this has meant that the South African government is starting to ease its grip on state firms, with Transnet targeting private operators for two key sites.

Transnet has earmarked its biggest facility in Durban, on the eastern coast, along with the more southerly Ngqura site for partnerships with private operators, said Bloomberg.

The process is set to kick off with a request for information to gauge interest from potential bidders. Bloomberg added that the Johannesburg-based company could ultimately issue shares in return for investment.

The plan is “crucial for improving the performance of our port system,” Derby said.

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