Challenges facing the heavy haulage industry
Haulage headlines daily, and usually in the negative. In adverse circumstances, this sector creates innumerable vicious circles that impact on one of the biggest integrated supply chains within any economy. In South Africa, where rail and air transport is not as sophisticated as developed countries, there is no alternative; road haulage is the most responsive, flexible, and economical forms of freight transport and that fact alone means it is exposed to enormous challenges.
Take the current situation. Issues currently on the table include the influence of unions; looting and hijacking, xenophobia, poor road infrastructure, fuel levies and increases, the introduction of PoPI, and innumerable compliance disclosures by operators. Add to this list the 2020 Covid-19 restrictions other than the transport of essential goods, which has translated into a frenetic catch-up on deliveries. In turn this has put incredible pressure on drivers who are working longer hours, often through the night, the result of which has seen a significant increase in single vehicle accidents says Anton Cornelissen, Head of Santam Heavy Haulage, the largest haulage insurer in South Africa, of heavy commercial vehicles with a gross mass exceeding 3 500kg.
“This is very concerning and not in the sense of claims, but rather in the loss of lives and downtime of clients who are still trying to recover from the 2020 lockdown,” he says. “Worse is that when a truck does become disabled en route, salvage is hindered by looting, which is yet another cost burden on financially constrained owners.”
The financial impacts of a stressed economy have also played out in the loss of some of South Africa’s historically popular transporters and bulk service suppliers. “It’s not an optimistic landscape currently,” says Cornelissen, “Yet it is these conditions that prove the value of Haulage Insurance, and more so under Santam’s umbrella where clients are rewarded for proper risk management over time.”
This will aid with the sustainability of clients’ businesses, who are also feeling the negative trend of many industry increases,” says Cornelissen. “For example, repair costs have been hiked, in some instances by as much as 40%, largely as a result of the OEM’s producing trucks that are far more sophisticated, some of which now cost in the region of up to R2-million.”
The increases also apply to claims, fuel costs, single vehicle incidents, and of course hijackings. “Hijackings remain concerning in South Africa,” says Cornelissen, who notes that in 2019/20 some 1202 cases were recorded. “Short of having every truck accompanied by security, there is little we can do because of all the unknowns. Instead, what we at Santam Heavy Haulage are motivating for, is driver health and wellness.”
This is what makes the heart of Santam Heavy Haulage pump, because as Cornelissen points out, the majority of claims are related to accidents that can be prevented. “We’ve watched hundreds of video clips where we see driver’s not wearing safety belts and when they veer off the road, the tendency is to jump out. When strapped in there is a far greater chance of vehicle recovery and driver safety.
“We also want to see drivers living and eating healthy, and getting the right amount of sleep. These factors can save phenomenal amounts of money for our clients if the right education is constantly available, and is an aspect we are fiercely promoting with similarly-minded stakeholders.”
The industry is also coming together to tackle environmental concerns, and which Santam as a group is passionate about. “Road haulage comes under a lot of scrutiny around such issues, yet we must face reality: until the OEM’s force legislation to change with the introduction, for example, of gas-powered or battery operated trucks, which really is a long way off, our hands are tied. We just don’t have the infrastructure in South Africa.
“In the trucking sector’s defense, and a lot of people don’t realise this, is that 90 ships on our seas produce more pollution than all the cars on the road. That does not mean that we are trying to take the focus off our road freight transporters but if you don’t have a network of supply services to match efforts for change, you can’t do much than just keep it on the agenda and adapt at the pace determined by authorities.”
Adapting to market conditions is something that Santam Heavy Haulage is renowned for, but not in the sense of increasing premiums simply to stay aligned to overall sector financial impacts. Covid-19 for example is a case in point, as is the substantial increase in pricing of new trucks. “No-one can take an increase of up to 40% in premiums just because the market add-ons dictate that,” says Cornelissen.
“Regardless of prevailing conditions, be that the almost unnatural increases that are way above inflation inclusive of spare parts and repair costs, Santam Heavy Haulage seek reasons to keep premiums at affordable rates. Last year, we decreased our premiums and gave rebates to our clients.
This is fortunate for haulage clients who avail of Santam’s umbrella of insurance products. For example, when goods are being imported, there could be more than one policy covering those products at numerous stages of the journey. Liability, should there be a claim, is therefore dependent on the terms and conditions attached to the sale or ownership of those goods. With Santam, all liability can be covered under one policy, regardless of whether there is cross-selling among Santam specialist divisions, whereas if using a number of different insurers the settlement of a claim can be very onerous.
“It might appear that heavy haulage insurance is fairly standard, somewhat like car insurance in many ways, but the contrary applies when a basket of insurance products is required. It means our underwriting morphs into a unique, bespoke and flexible policy, and better yet, allows us to decrease premiums. A bonus is that we also have products to help our clients finance the premiums,” explains Cornelissen.
For this reason it is a pity that due to legislation and the licensing regime, Santam Heavy Haulage cannot write business outside of South Africa. However registered-SA haulers that transport beyond the borders are covered, even to the extent of recovering impounded vehicles. This can be very tricky in, for example, the Congo, which is, Cornelissen says, about the limit of distance current clients transport to. “However, anything to anywhere can be covered if a client is willing to pay the premium.
“It’s really just a matter of being able to customise an insurance product applicable to a client’s needs in a specific environment while accounting for the innumerable challenges in play. We always represent our clients’ best interests, which is why Santam Heavy Haulage is involved in manifesting change, staying abreast of new and forthcoming issues, and continuing to find innovative ways to assist this valuable and crucial industry,” concludes Cornelissen.