South Africa’s latest fuel price increase is set to put further pressure on the road freight industry, businesses and already-strained consumers, with industry bodies warning that higher diesel costs will ripple through the economy.
Petrol has now breached the R30-a-litre mark in Gauteng, while diesel has increased by more than R3 a litre, adding significantly to the cost of transporting goods across the country.
The Road Freight Association (RFA) says the increase is a “hammer blow” to the road logistics sector, warning that transport companies will face mounting operational costs that could ultimately be passed on to consumers.
RFA CEO Gavin Kelly says fuel accounts for between 35% and 55% of operating costs, depending on the type of transport operation, vehicle and route.
“Fuel is one of the three largest operating costs in the transport industry,” Kelly said.
South Africa is particularly exposed to fuel price increases because more than 80% of land-based freight is moved by road.
Diesel powers everything from long-haul trucks transporting goods between ports, warehouses and distribution centres to smaller delivery vehicles supplying shops and businesses.
Kelly says the latest increase therefore extends far beyond the fuel station.
“The fuel price increase does not end at the pump price,” he said.
Once diesel becomes more expensive, the cost of moving goods from manufacturers to distribution centres and ultimately to retailers also rises.
Transport operators now face a difficult choice: absorb some of the additional costs and put pressure on their cash reserves, or increase transport rates and risk higher costs being passed through the supply chain.
Kelly says some operators may temporarily absorb the increases to protect existing contracts and relationships with clients, but sustained fuel-price pressure could create serious cash-flow problems.
Global instability drives local prices
The RFA says South Africa’s reliance on imported crude oil and petroleum products leaves the country vulnerable to movements in international oil markets.
Global oil prices, geopolitical tensions and the rand-dollar exchange rate all influence what motorists and businesses pay at the pump.
The latest increase has been driven largely by rising global oil prices, geopolitical concerns, a weaker rand and instability in global energy supply networks.
The association warns that further increases cannot be ruled out if tensions in the Middle East continue.
Consumers could feel the pain
The impact is likely to extend to household budgets as higher transport costs filter through to the prices of goods.
Motorists are already paying more to travel to work, while businesses face increased costs to move raw materials and finished products.
MISA, the Motor Industry Staff Association, has called on government to urgently reinstate a temporary reduction in the General Fuel Levy.
MISA says petrol has crossed the R30-a-litre mark for the first time, while illuminating paraffin has also seen a steep increase, placing additional pressure on poorer households.
MISA CEO Operations Martlé Keyter says fuel relief is now a matter of survival for workers.
“Workers cannot pay R30 a litre to get to work while the state takes more than R4 of every litre,” Keyter said.
MISA is calling for a temporary reduction of at least R3 a litre in the General Fuel Levy on petrol and diesel while international oil prices remain elevated.
It is also calling for targeted relief for households that rely on paraffin.
The organisation points to April’s fuel-levy intervention, when Treasury temporarily reduced the General Fuel Levy by R3 a litre and cut the diesel levy to zero following pressure from organised labour through Nedlac.
That relief has since lapsed.
Freight operators forced to adapt
With fuel prices becoming increasingly volatile, the RFA says operators are turning to technology and efficiency measures to reduce consumption.
These include telematics, route optimisation, driver training, improved vehicle maintenance, newer and more fuel-efficient vehicles, reducing congestion and standing time, and load-sharing initiatives.
Fuel adjustment clauses have also become increasingly common in transport contracts, allowing operators to partially recover changes in fuel costs.
But the RFA says these measures cannot completely shield the industry from sustained increases.
For South Africa, where road freight plays a central role in keeping goods moving, the latest fuel-price shock highlights the wider economic consequences of rising energy costs.
Every increase in the price of diesel has the potential to raise the cost of moving goods — ultimately putting more pressure on businesses and consumers already struggling with the rising cost of living.
With global oil markets remaining volatile, the freight industry is now bracing for what could be another difficult period if fuel prices rise again in November.
