Reference no: EM133459004
Transnet strike is 'rough', but the SOE must become sustainable, says CEO Portia Derby Transnet group CEO Portia Derby has hit back at critics who may feel Transnet should accede to union demands simply to end the "rough" strike, stressing that it is crucial to ensure the state-owned freight and Logistics Company remains sustainable. "We cannot have labour being 66% of our cost. The next big cost driver on our side is interest cost, followed by electricity and fuel costs," Derby said at the Agri SA annual congress in Pretoria on Thursday. "We are worried about the perishables. The citrus season is pretty much done, and we are now looking at the deciduous season starting. We are watching anxiously like everyone else. We are talking to the shipping lines and hoping really hard that we will get a solution.
"I live in hope," she said.
On Wednesday, Transnet tabled a three-year wage offer to the South African Transport and Allied Workers' Union (Satawu) and the United National Transport Union (UNTU) during wage talks facilitated by the Commission for Conciliation, Mediation, and Arbitration (CCMA). It includes a 4.5% across-the-board increase in the current year, a 5.3% across-theboard increase in 2023/24, a 5.3% across-the-board increase in 2024/25, and a 4.5% increase in the medical aid allowance in 2022/23 to be adjusted in subsequent years, in line with the increase.
Estimates are that the strike could cost the SA economy up to R1 billion a day. The Minerals Council SA, whose members account for more than 80% of Transnet's rail business and 50% of the group's income, is concerned that the strike is damaging exports and imports, "threatening not only mining companies but the country's fragile economy at a time when 44% of people are unemployed"
"According to our estimates, bulk mineral exporters are losing R815 million worth of exports per day because they are unable to rail and load 357 000 tonnes of iron ore, coal, chrome, ferrochrome and manganese on to ships daily. "On average, South Africa exports about 476 000 tonnes of bulk minerals a day worth R1.06 billion. We estimate that [at present] just 120 000 tonnes of minerals worth R261 million are being exported daily. Major mineral export harbours are operating at between 12% and 30% of their daily averages." An executive at a fruit export body, who wanted to remain anonymous, said high-level decision-makers like President Cyril Ramaphosa needed to intervene and classify staff at South African ports as essential workers. The executive said the Transnet strike puts SA's R3-billion berry export season at risk. South Africa is currently in its berry export season and exporters expect this will be the sector of the country's fresh produce export market that will, therefore, be the hardest hit by the Transnet strike. "Ports are strategic assets of SA. Logistic activities like exports must continue without interruptions," says the exporter
"All SA's competitors in the Southern Hemisphere will now be able to enter the overseas markets before SA and be seen as reliable suppliers. The longer SA harbours are impacted by Transnet strikes, the bigger the market share SA will lose overseas." According to Brent Walsh, CEO of producer organisation Berries ZA, harvesting of berries is happening and a lot of containers will require freight services over the next few weeks. "Any delays will slow down getting SA berries on to retail shelves in export markets. Berries are highly perishable and cold chain storage in Cape Town is going to come under a lot of pressure if there are significant delays," says Walsh. "We are waiting with bated breath to hear about the outcome of Transnet wage negotiations."
QUESTIONS
1. Evaluate the possible impact of the Workers' Union demands on performance of Transnet against the FIVE objectives of financial management for entities.
2. Elaborate on the importance of sound ethical decisions in business and discuss the FOUR considerations / requirements that can be utilised by Transnet to assist decision making.