JOHANNESBURG, Oct. 7– An impending fuel price hike in South Africa will negatively affect supply chains, transport systems, the wider logistics industry, and the pricing of goods on store shelves, the Road Freight Association (RFA) said on Tuesday.
On Monday, Minister of Mineral and Petroleum Resources Gwede Mantashe announced fuel price adjustments set to take effect on Wednesday. RFA Chief Executive Officer Gavin Kelly said the fuel increase will force transport companies to pass on the rising costs to consumers.
He noted that South Africa moves over 80 percent of its land-based freight by road, while a large portion of the general freight on rail also relies on diesel. “With fuel prices continuing to rise, transport companies will inevitably raise the cost of transport due to increasing pressure on operational costs.
Depending on the type of operation, routes, vehicles, and specific conditions of the transport leg, fuel can be anywhere between 35 percent and 55 percent of operating costs,” Kelly said.
Pointing out that a vast number of trucks rely on diesel, Kelly warned that the fuel hike would plunge the logistics chain and many transporters into severe cash flow constraints.
“Freight companies need to remain financially viable, and thus transport companies must choose whether to increase their rates … or whether they have the financial reserves to withstand the increases,” he said.
“The latter will place pressure on cash flow and reserves. Rate adjustments are often inevitable due to the recurring fuel price strain, even if some transport operators may temporarily withstand the cost to preserve contracts and relationships with clients.”
Meanwhile, the South African National Taxi Council held meetings in Johannesburg to discuss the impact of the latest fuel hike on taxi operators, industry employees, and commuters. (Namibia Daily News / Xinhua)
