Logistics: Compliance is more than just legitimacy or excellence
If South African logistics firms hope to compete in the market, they need to embrace compliance – not only in terms of laws and regulations but also social aspects that impact the world around us.
What is important to understand is that compliance is not only the responsibility of a company’s compliance officer but of every single person within the organisation.
The logistics sector is bound by numerous regulations, and with very good reason. Accidents and incidents that occur can be highly detrimental to a business.
In 2022, a South African online retail company made headlines for all the wrong reasons after being found in contravention of the Occupational Health and Safety Act, with general safety regulations and hazardous chemical agent regulations violated at its Gauteng warehouse.
On the transport side, there have been several major truck accidents on the N3 corridor resulting in the loss of life. In one of the cases, the vehicle was found to be unroadworthy, while in another it was established that the driver had been on duty beyond the specified number of driving hours.
Companies that fail to comply with regulations accordingly find themselves facing a significant threat of heavy fines, reputational damage or, in some cases, jail time for owners and directors.
In recent years, the need for logistics firms to comply with environmental legislation and regulations has grown exponentially to policies to reduce the planet’s carbon footprint.
From January 2024, companies falling within the European Union will be taxed heavily if they fail to reduce their carbon emissions.
These laws will impact South Africa, in that the country’s motor industry – which exports thousands of vehicles to the EU each year – will need to select supply chain partners that are fully compliant.
Not adhering to environmental regulations in Europe can directly impact the country’s vehicle manufacturers and, by extension, the jobs they can offer South Africans.
Figures from the South African Association of Freight Forwarders show for the week ending 20 October, 14% fewer vehicle units were exported than in the corresponding period last year – further illustrating that the sector cannot afford to have non-compliant partners.
Then, of course, there is being compliant with South Africa’s laws including employment equity, black economic empowerment, and addressing the divide between rich and poor – highly complex social aspects that also require high levels of compliance.
South Africa’s governance record is not the best either, given what transpired during the state capture years, so a company will not be doing the country any favours if it’s pursuing corrupt relationships.
There are several aspects companies need to consider when it comes to compliance.
The first is to understand the area in which they are operating. In cases where hazardous materials are being stored, for example, there needs to be an understanding of the regulations, certifications and permits that need to be in place. There also needs to be a checklist to ensure every box is being ticked.
Vitally important is to recognise that new permits have to be issued after specified times. The company’s facilities will need to be inspected to ensure they are still compliant with the original permit, as they may only legally trade once the new document has been issued.
The country’s laws may also change, which is why it is crucial for logistics firms to monitor government gazettes closely.
Firms would also do well to bolster their compliance efforts by implementing standards under the International Organisation for Standardization. Regular auditing ensures compliance which, in turn, assures clients that the business is above board in its operations.
Petrus Gerber
Supply Chain Solutions Manager
