South Africa Is On The Brink Of Total Chaos As Strikes Are Leading To Fuel And Cash Shortages

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The labor strikes that have engulfed the mining industry in South Africa in recent weeks have now spread to one of the country's most vital industries – trucking.

Without the trucking industry facilitating the flow of goods between purchasers and suppliers, things can get ugly pretty quickly, as they did in the U.K. in 2001 when truckers went on a similar strike and brought the British economy to the brink.

Truckers are already entering their second week of strikes in South Africa, and the economy is beginning to show cracks in the facade.

Now, ATMs are running out of cash.

Gas stations are running out of fuel.

Hospitals are running out of vital supplies.

This comes via  Sibongile Khumalo, a correspondent in South Africa for the Agence France Presse:

The strike has halted the delivery of goods across the country, as more than 20,000 workers dig in on their demand for higher wages.

Fuel pump stations have begun to dry up in several areas in Gauteng province, the country's economic centre, according to the South African Petroleum Industry Association (SAPIA).

"Some garages in Gauteng have been reporting fuel shortages since this past weekend," said Fani Tshifularo, the association's spokesman.

"Unfortunately garages do not keep large reserves of fuel on premises, so shortages are likely to occur faster," he said.

Meanwhile, hospitals are no longer receiving shipments of coal that they use to provide power, and they are now burning through reserve stocks.

And Khumalo writes that "a ccording to transport authorities, 80 percent of all freight in South Africa is conducted by road." That figure highlights why the trucking industry is so critical to the basic functioning of the South African economy.

The Wall Street Journal's Devon Maylie gives some background on the root of the conflict that led to the strikes:

More than 28,000 truck drivers are on strike across the country to demand higher wages and better working conditions, threatening to disrupt supplies of gasoline and other goods.

...

The spiraling demands for higher salaries stem in part from the topsy-turvy state of South Africa's labor movement. As rival unions jockey for new members, labor leaders have come under pressure to take aggressive stands on wage talks.

Trucking employers are offering the unions an 8.5 percent wage increase in 2013 along with an additional 0.5 percent in 2014, but the trucking unions want 12 percent, and they don't sound like they're backing down.

The unions are in talks today with employers to try to come to terms on the wage increases, but the outcome is unclear as the unions appear to be serious about their demands.

If trucking employers can't reach a deal soon, things could get worse very quickly, as the SAPIA spokesman in Khumalo's article mentioned above.

Here is a timeline of what more could go wrong as the strikes continue, via a recent paper analyzing supply-chain stoppages by complex systems scientist David Korowicz:

Next up: water supply.

MORE: Expert explains in detail how the next shock will shatter the global economy >



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