Komane Pitso is IMSAf's Senior Vice President: Commercial Operations. He joined Isuzu earlier this year with a wealth of expertise in supply chain management, logistics and commercial operations. His vision is to see IMSAf expand as “an automotive powerhouse in Africa, continuously growing in volume and value”.
Torque: What are some of the challenges that need to be addressed in the transport industry?
Komane: Let me start at a global level. The Covid19 pandemic has given us new challenges to solve in the transport industry. The transhipment/ consolidation of shipments through certain regions have been a cost-effective solution for many years. However, with the pandemic, we have seen how some of the major transhipment ports have become bottlenecks showing the need to look at how we manage the supply chain to ensure we maintain efficient transportation while gaining the cost benefit of consolidating shipments in areas. Looking at our continent, our first challenge is the poor border control management. A truck travelling from Johannesburg to Cape Town takes about 24 to 36 hours, while travelling [from Johannesburg] to Harare which is about 200km less, takes up to 8 days. This contributes to high freight costs. The second challenge in our continent is infrastructure. We do not have good rail connection infrastructure between the regions and as a result, this contributes to border congestion and also poor road conditions. There is a need to grow seamless transport modes and infrastructure to realise regional growth in Africa. Coming home to South Africa, we are faced with four key challenges: Rail infrastructure that does not provide a sustainable solution for freight of goods; this contributes to the second challenge of deteriorating and poor road infrastructure. Growing a seamless, reliable and sustainable transport network is critical to managing this problem (starting with making the rail network work for SA). The poor road infrastructure contributes to high vehicle maintenance costs, as well as compromising the safety of road users. Our third challenge is high fuel costs which increases the cost of moving goods. The fourth challenge - which requires our attention as well - is the need to reduce carbon emissions.
Torque: Milestones we can be proud of in the transport industry?
Komane: With the challenges that came with the beginning of the Covid-19 pandemic in 2020, most industries took a big knock, not only in sales and revenue, but in operations when the economy started to re-open. The transport industry in South Africa has seen an increase in the “last mile” delivery services with manufacturers and retailers being given an opportunity to extend and maintain their reach to the consumers through this transport service. Another aspect we can be proud of is how the transport industry has played a major role in helping the gradual recovery of our economy. The industry has demonstrated its resilience with its ability to 'get up and perform' while we are still faced with the blow of the pandemic.
Torque: Looking at the automotive industry, how can we make the value chain inclusive of small businesses?
Komane: Small businesses will get an opportunity to enter and grow in the value chain as soon as we start applying sourcing and development solutions relevant for small businesses instead of applying big corporate solutions. IMSAf has some great examples where capability and knowledge transfer, to develop small businesses, had been done. It is imperative that the value chain structure allows for the introduction and success of smaller businesses.
Torque: How has Covid-19 impacted the manufacturing business in terms of procurement, export and import? Komane: VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) has become more prevalent with the pandemic. The lead times, costs, and the supply of goods and services have been increasingly volatile, uncertain, and complex during the pandemic. This has led to manufacturing disruptions, ambiguity for the procurement professionals in contracting and sourcing goods and services and has disrupted the flow of goods for both imports and exports. In the automotive industry in particular several OEMs (Original Equipment Manufacturers) had their operations impacted for weeks, with exports and imports being disrupted. The impact of Covid-19 on the industry will be with us for a long time, hence it is imperative for businesses to be agile and adapt to this VUCA world we live in. Predictive and extended visibility across the supply chain is the new competitive advantage to help the supply chain, and in particular, those in transport, to keep manufacturing going and the economy alive.
Torque: Although there is record of an unprecedented fall in passenger numbers of between 60% and 90% globally – how did we manage to continue strong?
Komane: Even though travel restrictions meant that there would be a significant decline in passenger transport, consumer goods were always going to be in demand, even if, during the hard lockdown, this was not at pre-lockdown levels. This demand still drove the requirements for transport services and as I have mentioned earlier, “last-mile” transport services also came to the fore. On the new vehicle sales side, it has been encouraging to see sales recovery as the economy starts opening up.
Torque: What are our plans of time recovery post delays from imports?
Komane: We have seen a significant increase in freight rates due to capacity constraints and extended lead times. We will continue seeing this in the next couple of months to just over a year. Recovery plans will form two phases. The first phase is a short-term solution, which will look at adjusting inventory management policies at strategic points in the supply chain. Supporting the immediate term plan is to contract vessel space available with reliable freight companies (even though this has been at a premium). A second phase is a long-term approach: the increase in capacity in terms of vessels and containers will help relieve the supply pressure we have experienced. In addition, companies in the supply chain need to improve visibility across the supply chain to ensure the critical touchpoints in the value chain are able to plan better - balancing demand versus flow and timing of materials. This is what will change the transport industry significantly and this will aid with the recovery. Port delays have emphasised the importance of localisation, especially in the automotive industry. There are many benefits that include, but are not limited to, increased employment, reduced total costs, and reduced cost of capital with lower inventory. I am a firm believer that in South Africa we are capable of delivering a sustainable localisation solution that will benefit our economy.
Torque: How do we remain relevant as a business in the transport and automotive sector?
Komane: We need to understand the transformation of consumer demands with regards to mobility services to be in a position to meet their demands. By that I mean from an LCV and CV point of view, we need to get closer insights into what new solutions are becoming relevant for consumers so that we can be part of the solution. In terms of the transportation industry, seeing that we are in Transport Month, we need to improve visibility of the end-to-end supply chain and that needs to be real-time.
Torque: Please share your closing thoughts on the transport industry as a whole in South Africa?
Komane: Safety, cost and accessibility are critical for the transport industry in South Africa. It is critical to accelerate the investment in, and development of, extended and improved rapid transportation network (bus and rail). South Africa has circa 22,000km of rail network, this is a good foundation to building a reliable and world-class transport system. Secondly, EV (Electric Vehicle) strategy needs to be alive and South Africa needs to have a clear plan to develop the infrastructure to support EV in helping to move the country in a safe way, at a lower cost while conserving the environment.
This interview was originally published in the Edition 15 issue of Isuzu's Torque magazine. You can read the rest of the issue here.