PAARL-based Imperial Cargo Solutions – a subsidiary of JSE-listed mobility giant Imperial Logistics – is contemplating the closure of two of its key operations.
A letter from Imperial Cargo MD Steven Smith to staff – seen by CBN – said the company had no choice but commence with a formal consultation process which could lead to the closure of the general freight and line-haul operations.
Imperial Cargo was established in 1997 with the amalgamation of several Imperial companies – including Heavy Transport, Long Distance, Normans and Highway Carriers. It specialises in moving general freight across South Africa, Namibia, Lesotho, Botswana and Swaziland as well as managing several warehouses.
Key clients include Consol Glass, liquor giant Distell, Goodyear, Nampak, Pioneer Foods, Tongaat and Columbus Stainless Steel.
The company has depots in Paarl, Bellville, Worcester, Port Elizabeth and Alrode.
Smith despaired: “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 line-haul operations. In fact, all analysis has concluded that the general freight and line-haul operations has and will continue to generate losses and negative returns, destroying shareholder value.”
Smith added that these investigations had further concluded that Imperial Cargo was unable to compete with smaller and medium size low cost operators in the general freight and line-haul market.
He said the emergence of digital freight exchanges and platforms enables large clients to manage multiple smaller operators. “This enables them to drive rates, which Imperial Cargo is unable to operate profitably at, even further down.”
Smith said the impact of the COVID-19 pandemic had materially damaged the future prospects of any financial turnaround of the general freight and line-haul operations. These operations, he noted, were already producing losses and negative returns before the outbreak of COVID-19.