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.

Leave a comment

SmartProcurement Newsletter

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
* Country:
* Public / Private:


Career opportunites

Demand Planning Manager

  • <500 000 Gauteng Operations, Planning & Inventory Projects / Category Management
(Total Cost to Company R750k - R900K) excluding ...More

Global Category Manager: CONTRACTS

  • <500 000 Buyer Commodities Contract Gauteng
Total Cost to Company R1mil - R1.2mil excluding

Project Manager :12-18 MONTH CONTRACT

  • <500 000 Contract Procurement Officer / Specialist Projects / Category Management
Description:A well-known retail organization is looking for an ...More

Procurement Analyst

  • <500 000 Analyst Gauteng Permanent Procurement Management
Description:A leading infrastructure development group with strong presence ...More

Commodity Manager: Fuels and Lubes

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
Description:Ensuring continuity of supply in line with business ...More

Senior Facilities Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R800K - R900K) Description: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
(Total Cost to Company R350K - R550K) SOUTHERN ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
(Total Cost to Company R450k - R550k, dependent ...More

Procurement Specialis

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R700k - R800k including ...More

Solutions Architect

  • <500 000 Analyst Gauteng Operations, Planning & Inventory Permanent
(Total Cost to Company R1.3Mil - R1.1Mil including ...More

Engineering Manager

  • Gauteng Industrial Engineer Permanent Procurement Management
Total Cost to Company R850k - R950K including ...More

Country Head of Procurement

  • Permanent Procurement Management Procurement Officer / Specialist
https://careers.peopleclick.com/careerscp/client_gsk/external1931/gateway.dofunctionName=viewFromLink&jobPostId=359235&localeCode=en-us CBS Procurement,Hub Head of Procurement To lead, ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Planning/Demand%20Planner/TP2005490/MSe Category: PlanningPosition Title: Demand PlannerSalary: R600 000 ...More

Head of Procurement

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Procurement/Head%20of%20Procurement/TP2005488/ZBuCategory: ProcurementPosition Title: Head of ProcurementSalary: R1.3 million ...More

Warehouse and Distribution Manager

  • <500 000 Gauteng Logistics & Warehousing Permanent Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Logistics/Warehouse%20Distribution%20Manager/TP2005455/TMa Category: Supply ChainPosition Title: Warehouse and Distribution ...More

Supply Chain Manager

  • <500 000 Mpumalanga Permanent Procurement Officer / Specialist Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Mpumalanga/Supply%20Chain/Supply%20Chain%20Manager/TP2005448/LMa Category: Supply ChainPosition Title: Supply Chain Manager ...More

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Operations, Planning & Inventory Permanent
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Consulting/Continuous%20Improvement%20Manager/TP2005489/SNh Category: ConsultingPosition Title: Industrial EngineerSalary: R900 000 ...More

Operations Manager

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Our client within the FMCG industry with a ...More

Warehouse and Distribution Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
An exciting opportunity awaits for a Warehouse and ...More

Demand Planner

  • <500 000 Permanent
Get an opportunity to be part of one ...More