Imperial Cargo, a division of Imperial Logistics South Africa Group (Pty) Ltd has started consultations with its staff which could see the logistics giant close its general freight and linehaul operations, Managing Director Steven Smith has said in a memorandum addressed to staff.
The company laid off 330 code 14 truck drivers amongst a total of 591 employees in a massive restructuring process at the end of March 2020.
The retrenchments were fueled by the loss of one of the company’s biggest clients.
Addressing Imperial Cargo staff, Smith wrote;
It is with great sadness that I need to communicate the following important information to you.
After a vast amount of investigation, analysis and deliberation over the past months since I was made acting Managing Director of Imperial Cargo, together with our principles at Imperial head office, it has been decided that we have no choice or alternative but to
commence with a formal consultation process which could lead to the closure of Imperial Cargo’s general freight and linehaul operations.
The unfortunate reality is that each and every investigation and analysis conducted by us in the past number of months has concluded that Imperial Cargo is unable to generate sustainable profits and returns in general freight and linehaul operations, in fact, all analysis has concluded that the general freight and linehaul operations have and will continue to generate losses and negative returns, destroying shareholder value.
These investigations have further concluded that Imperial Cargo has been unable to and will continue to be unable to compete with smaller and medium-size low-cost operators in the general freight and linehaul market.
In addition, the emergence of digital freight exchanges and platforms enables large clients to manage multiple smaller operators and enables them to drive rates, which Imperial Cargo is unable to operate profitably at, even further down.
The impact of COVID-19 pandemic has materially damaged the future prospects of any financial turnaround of the general freight and linehaul operations, which was already producing losses and negative returns on shareholder investment, prior to the pandemic.
Read also: Retrenchments bell ring at Manline Freight
The impact of COVID-19 will definitely have a negative economic impact on South African businesses in the coming months and years.
The decision to begin this process is obviously a very significant decision. A decision not taken lightly and one taken after lengthy consideration and after exploring numerous alternatives. It is a decision that has been taken in the knowledge, and with huge regret, that should the consultation process lead to closure the general freight and linehaul operations, it will have a very negative impact on the lives of many.
The process to commence this will start today and a Section 189A letter detailing this contemplated closure of Imperial Cargo’s general freight and linehaul business will be individually issued to all of you. In addition, further organizational changes will also be announced in due course.
We know that this is extremely concerning news, at a difficult and uncertain time, that will cause you and your families many worries. We also know that at this stage there is very little we can say to alleviate the feelings you will be having. We can only assure you that every alternative has and will continue to be investigated during this contemplation.
We promise that we will support every single one of you through this process to the very best of our ability and endeavour to keep you updated of all developments. Ends