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THE ROAD Freight Association (RFA) says the fuel price increase that came into effect on Wednesday will mean that “you and I will pay more for everything”.
The RFA said the cost of diesel for transporters will increase by R1.42 for 500ppm and R1.43 for 50ppm. That will raise the prices to R25.49 and R35.75 respectively. The price of both grades of petrol – 93 and 95 – will increase by 51 cents per litre.
“What does this mean? Well, to put it in perspective, diesel cost R12.15 and R21.78 in January 2022. Diesel has doubled (increased by 100%) since December 2021,” said RFA chief executive Gavin Kelly.
Kelly said the transportation cost of goods and services together with an expected repo rate increase in November will grip the consumer in a tight financial squeeze, just before the festive season where traditionally many retailers have generated income to carry them through the financial year.
“This will not be as bountiful as it has been in the past, and there are many consumers who will ‘stay at home’ and cut the ‘lavish spending’ associated with the Festive Season,” he said.
Kelly pointed out that road freight transporters mainly use diesel as the energy source for their vehicles.
“They need to increase their pricing to cover the ever-increasing cost of diesel, and there are transporters who will not be able to carry on. This will be driven by the transporters’ need to fund operations (the use of fuel) whilst only being paid months after the work has been done, in some cases up to three months afterwards,” he said.
As a result, Kelly said, the RFA was beginning to see more businesses in stress/business rescue, while customers/businesses were reducing volumes to be transported or even curtailing stock movement depending on consumption levels.
Transporters will feel the impact on their businesses, he said.
“Whether we like it or not the continuous increases in the price of diesel inevitably drives the cost of transport and logistics up – step by step – and, with roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there will be increases to consumers, as the cost to transport goods increases,” said Kelly.
He said fuel had breached the 55% mark in daily operating costs during the third quarter of the year, and now as we head into the final month of 2022, it was already hovering at around 60%.
He said inevitably the consumer will bear the brunt of the massive increases.
“That cost will in most cases be borne by the consumer. You and I will pay more for – well – everything. From food to fuel, from clothing to electronic goods and everything in between. Prices will rise – some immediately, but more so a domino effect will ensue, the next in a long line of such domino effects that we have seen too often in the last few months.
“Transport costs will rise. There is no alternative for transporters – and those that cannot afford to carry loads at the rates or prices customers are prepared to pay, will simply close down,” said Kelly.