Financial Penalties

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Today many things started to make sense with regard to why transport/logistics is so expensive in South Africa. I guess whatever is happening here is most likely playing out elsewhere in other countries around the world. Normally SA follows what is happening elsewhere and replicates it and I am not a fan.

This morning a scheduled delivery was running late and my daughter was stressing talking about penalties. This I had not heard of before so she went on to explain what the penalties were. For every 15 minutes you are late you are penalized 5% of the total value of the order. There are no excuses accepted even if there are delays on the roads.

This to me is crazy as you worked with your suppliers in the past and you had time slots, but if you missed your slot whoever was next in line was then received at the loading bay. No one is late on purpose and nine times out of ten it will be a traffic jam due to a road accident. This is normal and you cannot know in advance what is going to happen. Sometimes you cannot find a quick exit as I have experienced a 10 hour and a 6 hour jam before without even moving 1 meter.

My first though ow knowing about the penalties imposed is why don't we increase our prices to cover a possible 5% or 10% penalty. This must have also been how the logistics companies think as they should cover you for the loss so their prices have been adjusted as well. This is how the prices rise through greed at the final destination thinking they are winning. Everyone loses and there are no winners in this scenario and why it is seriously dumb. The suppliers plus the logistics companies are benefitting, but not out of choice and have been forced into increasing their costs to cover the risk.

We got lucky today and played the system by dispatching an off loading crew in a smaller vehicle with the delivery paperwork and a few of the items removed from the truck loads. When the team arrived ahead of the trucks they were 10 minutes late, but number 6 in the queue. This is why the system is a farce because the 11am slot was backed up due to the number of vehicles waiting to off load. We cannot penalize them for being behind, but they can penalize us which is just not how business should be done.

I know the main Walmart delivery center from October onwards you can be delayed by up to 6-12 hours before you are received at a loading bay. No one complains and there ae no penalties because it is what it is and this is the busy season. Amazon have also some crazy procedures in place that do not make logical sense and actually delay the delivery process increasing the prices due to guaranteed delays.

I the logistics/delivery world there are higher prices charged for the large delivery centers (DC) by as much as an extra 40%. These prices are then handed over to the consumers and why prices have been rising slowly. Consumers are paying for the inadequacies of these companies in an around about way. The efficiency that we would have expected in the past has been replaced with hands off management and no common sense which is the truth mainly down to what I believe is through a lack of understanding.

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