E-tolling: logistics industry needs less emotion, more transformation

| 1 Comment
CobusRossouw.jpgAlthough e-tolling will affect the logistics industry in a number of ways, the spotlight is almost inevitably on the increased operational costs this will produce.   For logistics companies, however, the reality is that e-tolling could prove beneficial, says Cobus Rossouw, President of SAPICS.

Less than 10% of urban traffic is for freight movement, and yet the impact of congested roads on logistics and supply chain management is disproportionately high. When roads are congested, freight operators have to assume the worst to mitigate potential customer service failures. Therefore, even on a day when the roads are not congested, a minimum number of deliveries would have been scheduled. Consequently, deliveries finish earlier and the vehicles return to the depots: idle assets for that period.

In other words, congestion is already costing the logistics industry—and thus its downstream customers—a great deal in excess fuel consumption, owing to longer journey times, and in sub-optimal scheduling.

“Clearly, e-tolling will increase transport costs but, by reducing traffic congestion, it will confer benefits on logistics operators as well,” argues Rossouw. “Unproductive time spent between loading and off-loading points will be reduced. More importantly, less congestion improves the predictability of transport and distribution activities. The better we can predict how long a route will take, the better we can plan for multiple sequential activities—and thus increase the workload on vehicles to reduce cost.”

Better scheduling, as has been shown in several European countries, can also reduce the logistics industry’s carbon emissions and thus its impact on the environment.

Bearing this in mind, Rossouw suggests that the industry does not waste energy on resisting e-tolls but rather on getting its own house in order to mitigate the increased costs and ultimately extract the maximum benefit from the new traffic patterns that will inevitably develop.

Larger, professional logistics companies have the resources to invest in sophisticated modelling software to offset some of the extra costs through greater efficiencies. Smaller operators can take common-sense steps to minimise the impact of the additional operational costs of e-tolling. “If you know exactly how much it costs your vehicles to make a delivery, you will know exactly how much extra to charge in order to still make a profit”, says Rossouw. “It is unlikely that clients will search for other, cheaper operators, as everyone will have to increase fees in order to absorb the additional toll costs. If you can justify your increases, your clients will remain loyal.”

Whether logistics operators change the times at which they use tolled roads to take advantage of price differentials, or increase administrative staff to deal with the complexity of the system and the need for constant monitoring, or find ways to consolidate trips, readiness to identify changes and adjust operations will be much more beneficial than sticking your head in the sand.

“Change always brings opportunity: make sure you are ready to seize it,” Rossouw concludes.

1 Comment

Interesting analysis, had not looked at it in this dimension. But I agree with what you are saying, especially the route to OR Tambo from the northern surburbs, which might be a huge beneficiary of the initiative.

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