In a business deal that the aggrieved parties describe in near shakedown terms, a Botswana Railways subsidiary is said to be hogging the road haulage market at its dry port in Gaborone. Beyond assuming player and referee roles, the subsidiary, the Gaborone Container Terminal (stylized as GABCON), also happens to have the in-built advantage of owning the pitch on which this commercial game is played.
At its dry port, GABCON handles hundreds of shipping containers that are transported by Botswana Railways trains. After being processed by agents of shipping liners, the containers are transported by road to customers’ premises. In more familiar context, this is a nka-go-thusa operation mostly targeting retailers that happens in the forecourt of wholesalers, only much more money is involved here and the logistical processes are more elaborate. On average, the cost of transporting a shipping container locally is P800. In addition to Gabcon’s own fleet of trucks, there is also a group of private hauliers who transport the containers. Basically, this means that Gabcon is competing with these hauliers and the asymmetry of power couldn’t be more stark. As regards this competition, the parallel would be Wholesaler X having its own fleet of trucks that customers can hire for use. A private transporter says that over the years business has been good for both parties. Lately, however, cargo volumes have been decreasing on account of a sluggish economy.
All along, the private transporters have not been paying for access into the dry port but some time last year, the idea of introducing permit fees was mooted. The plan gathered pace earlier this year and two months ago, the Managing Director, Lesedi Moakofhi, formally notified all private transporters about the introduction of permit fees. Her letter, dated April 13, 2017, quotes fees for the four categories of access, charged on a progressive scale that starts at P120 for a daily permit and maxes out at P2500 for a yearly permit.
“All truckers will be required to render payment upfront before entering Gabcon and will also be supplied with disc stickers clearly stating which permit has been opted for,” Moakofhi’s letter reads.
Most transporters are said to have opted for the yearly permit because, on a comparative basis, it is the cheapest. Explaining the introduction of the permit fees, Gabcon’s Sales and Marketing Executive, Pinky Gobuamang, tells Sunday Standard that it is a standard practice for private hauliers entering the terminal or ports to pay permit fees.
“Through the introduction of the permit system, Gabcon has now established a database of registered service providers which enables full tracking, identification of the truck owner and the driver. This is done to assist Gabcon in cases of missing or unreturned containers, accidents at the customers’ premises which result in costly claims to the organization. Such information is required by insurance companies as part of the claim process,” she says.
The private transporters don’t dispute the point about the payment of permit fees being standard practice. What they are unhappy about are the fees which they deem way too exorbitant. Says one transporter: “In South Africa, the yearly fee is only R250 and after paying, one is allowed access to all South African ports like Durban and Cape Town.” In answer to the question of how Gabcon arrived at its own figures, Gobuamang says that the input cost – including maintenance of the terminal in the value chain – determines the pricing structure for the permit fee. She adds that the fees are charged on a progressive scale “to accommodate the differing needs” of the private transporters.
Moakofhi’s letter had left out one piece of vital information: that the value added tax (VAT) was not included. Transporters only came to learn of this charge when they paid for their permits and in the particular case of the yearly permit, the amount rose to P2800. According to transporter, the business is lucrative enough to enable those in it to provide for their families. In that regard, losing P2800 was better than losing money that one can use to put a roof over his head, food on the table and clothes on the back of his children and have enough left over to pay for other expenses. Paying the fee should have guaranteed a year’s access into the dry port but the situation continued to adversely evolve.
An April 28, 2017 letter from Moakofhi informed the truckers of another change. In it, she tells them of the implementation of a “new strategy” through which 25 percent of the daily cartage will be reserved for citizen truckers “as a contribution to citizen empowerment programme.” Such empowerment would manifest itself by reducing citizen unemployment.
“In the event that Gabcon is unable to cope with the demand due to unforeseen circumstances, private hauliers will be approached to assist. Only the private hauliers who have been approved and given permits to enter the terminal premises will be the ones engaged to cater for any excess demand. You are therefore requested to always maintain your trucks in good working condition so that you can contribute to the achievement of our strategy,” Moakofhi’s letter says.
Private transporters say that this strategy is doing the opposite of what it was designed to do. They charge that Gabcon denies them access to customers, instead telling them (customers) to use Gabcon’s own trucks which will otherwise lie idle. Explaining the allocation formula in raw figures, one transporter says if four containers have to be transported, Gabcon gets three (75 percent) while only one (25 percent) goes to the private transporters. In the context of this example, only one transporter among many will benefit. The source argues that contrary to the manner it has been touted, the citizen empowerment strategy is actually designed to disempower citizen transporters because when the free market forces flow unimpeded, the latter get way more than 25 percent of daily cartage.
Gobuamang explains this formula in the following way: “Gabcon’s core mandate is to conduct the business of the joint venture agreement on sound commercial profit-making principles. The 75 percent reserved for Gabcon is meant to facilitate going concern of the business as per the business plan.”
She says that in cases where Gabcon has excess containers in the terminal, it invites private transporters registered in its database to assist in the movement of the inventory. She counters in response to the transporters’ contestation: “In such cases, the sharing to private hauliers exceeds the 25 percent reserved rate. To load and offload the containers from the private trucks, private hauliers use Gabcon’s equipment (reach stacker) which is part of our contribution.”
The theory that private transporters advance is that Gabcon’s grand scheme is to cut them out of the business because it is in competition with them. Says one: “Gabcon had hoped to drive us out by introducing the exorbitant entry fees. When that didn’t work, it decided to use its advantage as owner of the premises where business is conducted to hog the market.”
While Gabcon, which putatively wears three hats (player, referee and stadium owner) seems to have the upper hand but a shipping liner source outlines a scenario in which all that might change. At a time that the company didn’t have to compete for business with private transporters, the latter established what are now long-standing relationships with customers. In other words, whereas in the past there was no middleman between the transporters and the customers, Gabcon now acts as one. The new strategy means that on a particular day, these customers may be in the 75 percent bracket and thus unable to do business with private transporters that they have been working with for years. Not all customers are too thrilled with Gabcon’s service and the shipping liner source says that dissatisfied customers may decide to have their goods transported into Botswana by road.
“These guys have money and for them, having goods transported by road from Durban cannot be a problem. If they choose to go down that route, Botswana Railways will lose a lot of money,” the source says.
Gabcon is jointly by the Botswana Railways and Transnet Freight Rail of South Africa. Both are state-owned.
