• Go-slow strike causes severe disruptions at Transnet Port Terminals in South Africa

    16 July 2019

    Reports indicate that a company-wide go-slow strike began at the end of June after the state-owned port operator Transnet Port Terminals failed to disburse an anticipated bonus payment to employees. The strike has resulted in vessel berth waiting times of 4 to 5 days at the Port of Durban, where 60% of South African imports and exports are processed. Unspecified equipment failures are further complicating matters at the port. However, the most severe impacts are at Ngqura Container Terminal near Port Elizabeth, where total waiting times for berths have increased to 7 days or more. At both locations, shipping companies indicated that they are incurring losses of USD 25,000 each day due to the delays, prompting some vessels to bypass ports. Disruptions have also been reported at Port Elizabeth Container Terminal and in Cape Town. Some carriers, such as MSC, Maersk, and ONE have announced the employment of extra loaders in an attempt to minimize delays during port calls in South Africa.

    Local agricultural exports threatened and automotive production disrupted

    At Ngqura Container Terminal, container loading has slowed from 25 containers per hour to between 5 and 8 containers per hour. This has had a significant impact on local agricultural cargo, particularly citrus exporters who are in high season between the months of February and August. Citrus industry representatives additionally noted that the go-slow strike has exacerbated pre-existing challenges with low crane capacity, limited cold storage capacity, and limited container availability.

    Volkswagen, one of the container terminal’s largest customers, utilizes the terminal as a critical transit point for parts supplied to their assembly plant in Uitenhage. The plant is missing its production target of 680 units per day by approximately 400 units. Losses are expected to intensify if critical parts for the just-in-time manufacturing process do not arrive soon. A vessel with 150 containers including some critical automotive parts is reportedly in the Nelson Mandela Bay area but has not yet managed to berth at the terminal. Reports indicate that trucks have been forced to wait for up to 18 hours for inbound and outbound shipments, with members of local meat, textile, and electronics industries also reporting ground transportation disruptions.

    Poor management decisions blamed for the strike

    Expert testimony to media suggests that the cause of the strike was a critical failure in judgment by Transnet managers. Historically, Transnet has announced incentive bonus payments on the morning that financial statements are released to the public. Such an announcement was anticipated at the end of June and it is understood that employees were under the impression that bonus payments would be processed at that time in a regular fashion. However, the financial statement release has been delayed by an ongoing audit that is not likely to be concluded until mid- August, and Transnet is not able to disburse the funds until the audit is completed.

    As the end of June neared, with funds for bonus payment disbursal inaccessible until the audit is completed, Transnet managers issued a new stipulation that bonus payments will be paid to employees on the condition that employees have met on-time-performance targets, a proposal that was reportedly rejected by some workers. While labor unions representing Transnet employees chose not to resort to industrial action, non-unionized workers expressed frustration at the handling of the matter and organized their own strike. As evidence of their frustration, this action was executed without sanctioning from South African courts, which protects employees from being fired for strike participation.  At least 11 employees have been suspended for their participation.

    Transnet secures court order to end strike

    On July 14, Transnet announced that it has obtained an interdiction from the Labor Court of Port Elizabeth that orders striking employees to halt their action. Reports on July 15 indicated that performance at Transnet Port Terminals was already improving. Delays are likely to persist as backlogs are cleared.

    Customers are advised to monitor further developments on Resilience360.

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