By Jennigay Coetzer – first published in Business Day newspaper, 28 January 2011

The past two years have been tough for the courier services industry in South Africa, with a number of operators going out of business, including some 5 of the top 100 of the total 2000 players in this market, says Tim Steel, MD for South Africa at TNT Express.

“The market has been tough globally due to a reduction in the volume of goods being delivered, because customers have been selling less.”This in turn has put pressure on  prices due to fierce competition.

In the current economic climate, customers are prepared to pay less and wait longer for delivery, as long as the goods arrive within the agreed time frame, says Steel. Industry  players are now saying they cannot continue to keep prices down because of increasing costs and have started putting their prices back up to pre-recession levels.

“This is happening globally,” he says. TNT has introduced Economy Express, a cheaper service that gets parcels from London to Johannesburg in 48 hours instead of 24 hours, and is available globally for other starting points and destinations, says Steel.

To reduce the cost the company consolidates and ships goods from multiple customers on the same trip. It also reorganises routes, using a combination of air and road, which takes longer, but is about 15% to 20% cheaper depending on volumes and other criteria.

“We have grown volumes on that product two-fold over the past year because although the goods arrive later delivery time is guaranteed,” says Steel. He says the current strength of the rand has reduced export traffic, but there has been a huge influx of imports.

“Our import clearance is very efficient, and we can get goods from anywhere to anywhere without delay if the paperwork is in order.” He says in this case parcels are cleared in advance, and there are no delays at customs.

The customs clearance process is complex and every country has different requirements, which often need to be explained to customers in simple terms when keeping them informed of progress with their parcels, says Steel.

He says the South African customs process is being modernised to comply with international standards, for example relating to the way their receive and manage data from various stakeholders in the supply chain.

This means upgrading systems to provide the right information in the right format at the right time. Steel says the increasingly stringent security processes that are required to check for bombs and other dangerous content, is another factor that is adding to courier costs.

This process includes checking to ensure the details of the shipper are identifiable and the paperwork identifying the contents is in order. Parcels are then X-rayed at the depot according to local and international aviation security standards before being taken to the airport.
“If the content of a parcel contains no-fly elements we send it back, and If there was any suspicion of a terrorist problem, we would involve the security authorities.” No-fly content includes printer cartridges weighing more than 488 grams and certain types of batteries, such as lithium batteries, which have been found to be unstable and could explode.

“There are many items on the no-fly list that need identifying,” says Steel. He says the security at South African airports is world class due to being upgraded for the World Cup.

Jennigay Coetzer is a freelance business and technology journalist with 25 years experience, and she writes regularly for Business Day. She also runs media training and writing skills workshops, and is the author of A Perfect Press Release – or Not?, a guide to writing and distributing effective press releases, an electronic version of which can be downloaded free from her website: www.jennigay.co.za.

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