Big South African logistics company facing serious issues

RTT, one of South Africa’s largest and most important logistics companies, faces severe financial problems.

It has reached such critical levels that RTT temporarily suspended employer contributions to the Sanlam Umbrella Fund.

The company also informed staff that there would be no salary increases or bonuses and that they would not be paid overtime.

RTT is one of South Africa’s leading logistics companies, providing numerous services to large retailers in the country.

Its superior network size and infrastructure compared to most of its competitors give it an advantage in the South African market.

The company’s divisions include RTT Distribution, RTT Style, CourierIT, and Warehousing and On Demand.

RTT is also the company behind Pingo, the delivery partner that made Checkers Sixty60 a runaway success. Shoprite acquired RTT’s stake in Pingo last year.

This month, RTT told employees it is experiencing short- to medium-term profitability challenges that will affect the company.

The first impact is that RTT will stop employer contributions to the Sanlam Umbrella Fund for six months starting on 1 March 2025.

“We made an application that the contributions … be temporarily suspended effective 1 March 2025 until the target date,” RTT CEO Rudi Keet told employees.

“We believe that we will be able to resume full contributory membership after 6 months, by the end of August 2025.”

Keet apologised to employees for the interruption in contribution to the Sanlam Umbrella Fund, which forms part of their retirement plan.

Keet told staff that if they have objections, they can reach out to their HR business partner who will support them with this process.

“Failure to object will be regarded as your understanding and acceptance of the company’s position and support for the need to apply for the contribution holiday,” Keet said.

The company also informed employees that its dire financial situation means it cannot afford salary increases, bonuses, or overtime pay.

“We are doing our best to overcome our challenges, improve our position, and continue to offer meaningful employment to our valued staff members,” Keet said.

RTT financial challenges

Keet told Daily Investor that it has embarked on an internal reorganisation process that began in in the middle of 2024 as part of its long-term growth strategy.

“This process has taken longer than anticipated because of challenging market conditions,” Keet told Daily Investor.

“It has necessitated proactive, short-term cost containment measures to responsibly manage risks as we continue to pursue strategic investments in new opportunities.”

He said these measures will not impact RTT’s current operations, and they remain committed to fulfilling all service-level agreements.

“Our balance sheet is strong and stable, and we remain highly confident in the future of our business,” He said.

Keet said the goals of its internal reorganisation included a review of the key market sectors and industries that align with its core capabilities.

“We have focused on improving business efficiencies and cost-effectiveness whilst simultaneously investing in technological capabilities and growth opportunities,” he said.

“These investments will support us in continuing to provide seamless, reliable, and industry-leading logistics solutions.”

The company added that the changes will strengthen its position as a market leader in the specialist logistics and supply chain industry.

“Our internal reorganisation is scheduled for completion by the end of the year,” Keet told Daily Investor.

“Additionally, RTT has secured material new contracts with leading brands, and we look forward to introducing these partnerships into our business.”

No increases or bonuses for staff

Keet said the decision to stop staff salary increases and bonuses has been proposed as part of a cost-containment strategy.

This strategy is aimed at safeguarding jobs, managing capital, and freeing up resources for critical investments.

“These measures will sustain RTT’s competitiveness and expansion as we onboard new contracts,” Keet said.

He explained that RTT provides time off instead of overtime work payments. However, overtime payments continue to be made where time off work is not feasible.

“All decisions have been made in close consultation with staff, with whom we are working closely to lay a strong foundation for the future of the company,” Keet said.

“The proposed measures are intended to be temporary as we complete an internal reorganisation process and onboard new contracts.”

Suspending employer contributions to the Sanlam Umbrella Fund

Keet explained that RTT has made a joint application for a contribution holiday for employer and employee contributions to the Sanlam Umbrella Fund.

The company is still awaiting the final decision from the fund administrators. “This has been clearly communicated to staff,” he said.

Employees have the option to either continue contributing their portion or to use their portion to supplement their income for six months.

“To help employees make informed decisions, RTT has engaged PSG, which will offer financial wellness sessions,” Keet said.

He added that no decision has been made on whether RTT will inject additional payments as part of employer contributions.

“RTT can confirm that it will continue to invest in the provident fund once the holiday period has lapsed,” Keet said.

“RTT will also continue to pay all death, disability and other risk benefits on employees’ behalf in the interim, preventing any lapses in coverage.”

Meanwhile, as RTT awaits final feedback from the fund administrators, it remains up to date with provident fund contributions.

RTT’s financial situation is stable

Keet emphasised that RTT’s financial situation is stable despite the short-term profitability issues.

“Over the past few months, the company has implemented several proactive measures to ensure its continued sustainability as it invests in the future,” he said.

“We have consolidated some business units to better align resources and optimise operations while reducing a material portion of our existing long-term debt.”

RTT has also proposed temporary financial controls to balance revenue and expenditure. The board, shareholders, staff, and other stakeholders are consulted regarding these decisions.

“As part of our forward-looking strategy, we are making targeted investments in material assets and updating systems with the goal of expanding in strategic areas,” Keet said.

“We are maintaining our focus on supporting clients with the highest levels of service and efficiency.”

Keet added that RTT has secured material new contracts with large companies, and they look forward to partnering with them.

“Together, we believe these steps will establish a solid base for our long-term success, placing us on a positive growth trajectory for the next forty years of our journey,” he said.