What is a Direct Transport Contract?
(This article is more relevant to Transport in the Mining Industry)

Of-course this is ideal when you have a Direct Contract. What does this mean? The common understanding is that It implies that the Transporter is directly contracted by the Client (the owner of the goods). The simplest example is where a Mining Company perhaps Anglo Amercian contracts ABC Transport to transport a certain tonnage of goods to defined destinations. Theoretically this sounds excellent - The Transporter receives the highest possible rate per ton and he is guarateed payment via contractual arrangements with a Blue Chip Company.

The Question is - What goes with a Direct Contract?

First ABC Transport must have the infrasturcture to provide a direct transport service to the Client. He will need the following in most cases:

1. Loading equipment and staff to manage the loading equipment.
2. Support staff at loading and offloading points - perhaps additional staff to assist with tarpaulins, etc.
3. Safety offices at loading points, offloading points and on route from collection to delivery points.
4. The infrstructure to manage and measure loads and offloads, to reconcile loads with the Mine and to ensure correctness of billing.
5. And probably a few other measures as dictated by the Mine.

In essence, a "Direct Contract Holder" or as many of us understand it, The Principal Contract Holder must be a well established Management and Logistics company or be able to contract or subcontract the services of various equipment and truck owners to be able to offer some or all of the above.

A Principal Contract Holder does not provide Transport Services. He must provide a Total Logistics Solution to the client. The end result being the safe delivery of goods to the Mine's client.

So many transporters do not understand this. They believe that if they have 1 or 2 trucks, they should be given a Direct Contract. Best of all, there is the perception that once their trucks are placed, they need not be there. The Drivers are there - What they do not realise is that Drivers are not Logistics Managers.

Still looking for a Direct Contract, Think Again? I hope that many of you will now understand the Task of a Transport and Logistics Management Company and that of a Transporter. This also places into persepective the issue of Contracting and Sub-contracting.

The above information has not been thumb-sucked. Africatransport has just been awarded a Transport and Logistics Management Contract with a Mine in Mpumalanga. Operations will start on 1st April 2010. In order to meet the requirements of our client, we will be investing in access of R1 Million Rand to provide the infrastructure needed - this is apart from sourcing the equipment, trucks etc to provide the Transport service. Details of this Project will be placed on the Website soon. We are at this stage not allowed to advertise or make this project public.

What about Transport Brokers?

I may as well as cover it in this article. Transport Brokers, do not forget, have access to Logistics Companies, Contractors and Sub-contractors and they are able to put together a transaction that could be concluded between the paries for a Brokerage Commission due to them.

Many brokers have however taken advantage of this situation and started charging placement fees, a percentage of the earnings over the life of the contract and many other illegitimate ways to earn their money.

Having said all of this, there are some very legitimate Brokers out there - How many - I am not certain - Do your homework.

Happy Trucking!

Silvan Pillay