By broadening its product range, Serco Industries has effectively responded to the challenging business environment in South Africa. With Serco’s specialisation in the design and manufacturing of truck bodies and trailers, the company has gained an edge in a competitive market.
At the start of 2024, truck body and trailer building company Serco Industries expected business challenges. However, despite the onslaught of challenges, Serco focuses on delivering quality products by optimising its vehicles for better payloads, reduced running costs, and improved durability.
“Over the last year, our focus has been on diversifying our product range to grow our dry freight offerings, and we’ve seen positive growth there, but the refrigerated trailer side is feeling the pinch of the stagnant economy,” says Serco CEO Clinton Holcroft.
Holcroft mentions that Serco’s refrigerated body business was down 18% for December 2023 to February this year compared to the same period in 2022/23, and the trend looks likely to continue into March. This drop primarily reflected lower-than-expected refrigerated trailer sales.
Identifying challenges
Holcroft assesses that the most significant factors restricting economic growth in South Africa were corruption, load shedding, crime, and poor performance accountability, which contribute to excessive unemployment and headwinds to business growth for companies like Serco Industries.
Serco also faces competition in South Africa in the form of second-hand trailers.
“We saw a flood of second-hand refrigerated trailers into the market last year as certain corporate fleets reduced unutilised trailers,” says Holcroft.
For customers purchasing these trailers, they do come with their own set of issues, primarily related to costs.
“Older equipment tends to require higher maintenance levels, while new equipment often comes with improved payload and reliability.”
According to Holcroft, high interest rates also affected general sales, but he hopes they will reduce soon, improving the affordability of new trailer purchases as the interest rate cycle changes.
“To survive in challenging economic conditions, we focus fanatically on giving our customers the edge, which we do through designing and building products with low life cycle costs and through offering innovative solutions. Our national manufacturing and after-sales service also ensures that our customers can develop their products at locations that are convenient for their operations. We also believe that as a forward-thinking business, we need to take sustainability seriously, which we have done by putting solar into our main production sites in Durban, Johannesburg and Cape Town as part of our goal to achieve 75% of our power from sustainable sources,” said Holcroft.
In February 2024, Serco set a record of 67% of its power usage being generated from solar.
New Trailers
According to Holcroft, trailers serve as the backbone of cargo transportation. They facilitate the movement of goods across South Africa and are vital to ensure the smooth flow of supply chains.
“The unreliable rail system has forced the private sector to find solutions for moving goods. Particularly for bulk commodities and cargo, much of which was previously transported on rail, has now moved to the road, which has been positive for the trailer building industry, who have stepped up to meet the demand.”
"Other growth areas include the increasing shift toward online sales and door-to-door deliveries. This trend has led to the need for high-volume, long-distance vehicles as well as lighter-weight last-mile delivery vehicles specifically designed for door-to-door service."
This demand has allowed Serco to offer a diverse range of transport solutions which meet the needs of cargo transportation in South Africa.
He said a key issue raised by clients was the need for their trucks and trailers to last longer. “With this in mind, we have worked with our technical team and key global suppliers to develop innovative solutions to improve the durability and performance of our truck and trailer bodies,” comments Holcroft.
“This has included improving payload with the introduction of our Protec Lite trailer, which is 700kg lighter than the standard offering, and the introduction last year of the premium panel technology Protec Plus refrigerated trailer—both are receiving positive feedback for durability and payload.”
More options
“We have broadened our product range to include van bodies and curtain sider vehicles to complement the range of refrigerated and dry freight box body vehicles for which we are well known. We have engaged with our customers to identify pain points and opportunities for innovative solutions. This has included improving payload, loading volume and vehicle body durability. These directly contribute to reducing running costs for our customers, which is critical to gaining an edge in a competitive market,” says Holcroft about how Serco has been able to operate effectively despite the influx of second-hand trailers and the stagnant economy.
Holcroft adds that they are introducing a new lightweight aluminium van body for small to medium-sized truck chassis to offer improved payload over the standard.
“We have also recently completed six refrigerated trailers with an electric axle-driven system which powers the fridge unit instead of diesel. With sustainability being a high priority for many fleet owners and us, we are seeing more interest towards innovative solutions to reduce the amount of diesel being used,” adds Holcroft.
“In addition, Serco’s broadening product range has seen a significant increase in the number of quotes being generated during the first quarter of 2024, which bodes well for a better year ahead’’.
“The drive to reduce distribution costs by transporters, is generating some positive activity as older vehicles are replaced with more efficient newer models. Hopefully, the elections will create better certainty and hopefully a more performance-oriented government, which will bode well for unlocking the country’s economic growth potential,” he adds.
Holcroft is optimistic about 2024, seeing a “reasonable” improvement in Serco’s trailer and truck body sales. Recent product enhancements, including a high-volume dry freight interlink trailer and the lightweight Protec Lite refrigerated trailer, have attracted positive client feedback.
“Serco is meeting challenges, committed to delivering exceptional service, while helping steer the truck and trailer building industry towards a brighter future,” he added.