Cape Town taxi strike caused supply chain and warehouse chaos

Inospace, South Africa's largest owner of last-mile delivery logistics parks, has reported that the non-delivery of goods resulted in supply chain chaos, with demand for short-term warehousing space being even higher than during the Covid lockdown period.

Retail was severely impacted by staff absenteeism of close to 70% of staff in many sectors. The Cape Town port was operated with 60% of its staff, thus hampering ship movements, container discharge, and collection/deliveries.

Some goods did not reach production lines, and finished products did not reach consumers. Export activities were also affected due to concerns for staff safety, further affecting the movement of goods and products.

The reported non-attendance of staff and a huge drop in consumers through stores triggered overflowing warehouses across the Cape Peninsula.

According to South Africa's largest last-mile delivery warehouse group, Inospace, there are parallels between the strike's impact on business operations and the effects of Covid-19.

"In many ways, the strike was far worse than the Covid lockdowns. During the pandemic, workers in essential industries came to work and delivered products directly to stores and consumers. With the strike, goods languished in warehouses, and the supply chain was totally seized," says Jacques Weber, Chief Operating Officer of Inospace.

With piles of inventory stacking up, Inospace's call centres are still being inundated with requests for short-term warehouse space. As a result of the strike, warehouses are swamped with increased inventory, and space has become extremely limited.

Inospace, which launched an outsourced shared warehouse offering last month, is bursting at the seams as goods that came in have not been delivered to end-user consumers.

"During the Covid era, the seizing up of supply chains caused two years of disruption. After over two years of chronic supply chain headaches, inventory management is now a central focus for retailers and industrial companies. But the strike and inventory situation caught us off guard," said Weber.  

The strike has not only affected and triggered unprecedented demand for short-term warehouse space but has also caused property management issues for many Cape Town property companies.

"Chronic staff shortages have meant that we have had to take drastic measures to find security guards, cleaning staff and maintenance personnel," said Weber. "Our new outsourced warehousing offering has been the largest recipient of the taxi strike. We pulled out all the stops to keep our fulfilment centre open, and people were working 24-hour shifts, with the 300% increase in warehousing demand".

According to Weber, the demand for outsourced warehousing will grow as companies realise they don't need to only enter into long-term leases to secure warehousing. "If there is one thing that we can learn, it is that supply chain disruptions are a permanent feature of business today and offering flexible leases in traditional dedicated spaces, and scalable warehousing in shared facilities is a game changer in the warehousing sector".