Threats to South Africa’s Supply Chain Network
South Africa relies heavily on its road network to transport goods; however, several significant socioeconomic and security-related issues threaten the country’s supply chain network. Some of these threats were starkly exposed in mid-July when several major routes, including the vital N3 highway corridor between the Port of Durban, which receives 60 percent of containers arriving in the country, and the most economically important province, Gauteng, was temporarily cut after rioters and looters attacked and set fire to cargo vehicles and blocked part of the route. This occurred amid unrest across Mpumalanga, Gauteng, and KwaZulu-Natal, during which dozens of warehouses and businesses were looted by opportunists and criminals. The unrest was sparked by the arrest and incarceration of former President Jacob Zuma and quickly evolved into socioeconomic unrest, resulting in shortages of various types of goods. Fortuitously, it was not long-lived, and the security forces reopened the corridor and many other secondary routes within a few days. Supply chains have since resumed regular operation.
South Africa has the tenth longest road network in the world and the largest in Africa. Its ports are managed by the Transnet National Ports Authority (TNPA), a state-owned company. The ports and road network are vitally important for South Africa and its Southern African neighbors, including Lesotho, eSwatini, Botswana, Namibia, Zimbabwe, and Mozambique. The July unrest and any future bouts of politically motivated civil unrest remain a key consideration for logistics managers seeking to ensure its goods and personnel's smooth and safe transport and delivery. While this threat is the most prominent now, the threat to the sector from service delivery protests and general criminal and corrupt activity is well-established and will continue to threaten and cause disruptions within the supply chain.
Service Delivery Protests
South Africa’s road network, of which the “N” National highways are the most prominent, is regularly impacted by service delivery protests. Despite being relatively prosperous compared to its neighbors, South Africa has one of the world's highest rates of unemployment (34.4 percent) and poverty (approximately 50 percent of the population live below the poverty line). The government has sought to address socioeconomic concerns; however, its policies have failed to bolster the economy sufficiently to meet the demands of an increasing population. The COVID-19 pandemic and related government restrictions have further undermined the economy over the past 18 months. Informal settlements have bloomed across the country as people seek employment near towns and cities. Nearly every prominent urban location in South Africa has at least one informal settlement nearby. Providing services, including housing, electricity, and water, is a crucial goal of local government; however, the execution of the objective and implementation of policies is insufficient. As a result, community unrest is reported almost daily across the country. A common tactic is blocking major arterial and secondary routes with debris to pressure the authorities to meet community demands.
Service-related protests impact national road routes across the country; however, Gauteng, KwaZulu-Natal, and the Western Cape have experienced the brunt of these short-term, highly disruptive events. According to statistics supplied by the ISS Protest and Public Violence Monitoring Project, the number of related protests has increased in recent years. Between Aug. 1, 2020, and Jan 31, 2021, the authorities registered approximately 900 service delivery demonstrations. Security forces will often attend to the demonstrations but will not engage in physical dispersal until after negotiations with the protesters. Such talks could take several hours and regularly cause significant disruptions to freight transport and private travel itineraries. The security force response is often the only step by officials; this reactive policy does not address the root causes of the unrest. In many cases, protesters disperse only to return a day later, leading to the same disruptions as before.
Crime and Corruption
South Africa’s high levels of crime contribute to a significant threat to the freight industry. Well-organized criminal gangs operate in all major urban centers. The use of violence is common, particularly during attacks against cargo vehicles in transit. Robbery/hijacking of cargo vehicles and looting vehicles parked along road routes are also common in South Africa’s Gauteng, Eastern Cape, Western Cape, and KwaZulu Natal provinces. Theft from warehousing facilities and depots has also been a long-running concern as criminals have developed sophisticated methods to gain entry to facilities to engage in theft.
South Africa is also affected by high levels of state corruption, including within the police service. This has manifested in creative methods to obtain access to freight cargo. One such tactic is the so-called ‘blue light gang’ approach, whereby police officials will be paid to stop target vehicles in unsecured areas. Once stopped, the official will leave, and criminals will hijack the truck and its goods. The use of violence during these attacks is common. The highly lucrative nature of these incidents and law enforcement involvement bodes ill, and the tactic is likely to continue for the medium term. The police service’s poor crime intelligence record, prevailing socioeconomic conditions, and inefficient prosecuting authority will also likely contribute to continuing high levels of lucrative crime incidents targeting the supply chain.
Outlook
The threat to the freight sector is unlikely to abate over the medium-term. While the government has deployed security forces widely and quelled major disruptive events, the threat of resumption is ever-present. Short-term, highly disruptive events are a long-term concern but can be managed; however, the costs of mitigation measures, including escalating insurance costs, will continue to burden the industry. Longer lasting, wide-ranging periods of unrest, as seen in July, will also serve to increase anxiety. Investors and freight industry leaders may increasingly seek to reroute shipments through alternative ports, such as Walvis Bay in Namibia, if supply chain security is not improved. This would have a significant impact on regional and national economies. Any further significant acts of looting and unrest and the associated economic impact will also exacerbate the country’s socioeconomic pressures, which are a major contributor to high levels of crime.
Threat Mitigation Summary
Security managers and companies seeking to safeguard their supply chain should ensure that all threats and vulnerable locations are identified. All risks should be reviewed and documented, from widespread acts of civil unrest to petty theft at storage sites.
- Adequate perimeter fencing and barriers, out-of-normal hours alarm systems, lighting, access control, CCTV monitoring with a clear line of sight, electronic access control on-site, and 24-hour security should be considered for all storage/warehouse sites.
- All machine systems should have an Uninterrupted Power Supply (UPS) to account for power outages. Maintenance contracts for all security systems are advised.
- Robust pre-employment screening and security-focused employee training.
- Regular/annual review of on-site security measures with trusted security partners.
- Regular security assessments of freight transport routes, identifying high risk areas/hotspots and travel times and considering risks aligned with the general political and security environment.
- Security awareness and defensive driving training for transporters.
- Securing freight cargo and using vehicle tracking technology.
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