Fuel costs and wage bill cripple truckers

The diesel price has now reached such a high level that the fuel component of road transporters’ overall cost infrastructure has begun to assume a worrying proportion, according to Paul Rayner, MD of DTB Cartage, a short-haul container carrier from the Port of Durban. The latest increases are what Rayner describes as “substantial”. “Apart from trying to recover the increase in diesel through surcharges,” he told FTW, “we also need to recover the 9% wage increase recently agreed to at the National Bargaining Council negotiations – and people have always been a significant cost factor in this labour intensive industry. The two elements are now having a very noticeable effect on the required increase in our rates. “This is very difficult for the industry given the present market conditions, where a large number of the small, often fly-bynight trucking companies are cutting prices to unsustainable levels, and putting unfair pressure on the whole trucking community.” The new diesel price increases comprise: The average product over/ (under)-recovery rounded to the nearest full cent for price (increase)/decrease; increase on fuel levy; increase on Road Accident Fund (RAF) levy; and increase in transport cost. This last factor pushes up the inland costs more than the coastal, because fuel has to be either pipelined or road hauled from the coast to the inland destinations. The diesel price in Gauteng has gone up from 878.051cents/litre for 0.05% sulphur content (the grade almost all the truckers use) to 948.451c/l – an increase of 70.4c/l (8%). The coastal price has gone up from 864.251c/l to 928.051c/l – an increase of 63.8c/l (7.4%). The recovery of these new prices is calculated by the road transporters in one of a number of ways, according to Rayner. “There is normally something built into the contracts,” he said. “There is a clause to say that we’ll adjust our rates on a quarterly basis to accommodate the change in fuel prices, or it will be done with a monthly fuel surcharge.” Looking at the future, a prediction by Reuters is an indication of what can be expected to happen. Brent crude is currently about US$119 a barrel. The latest Reuters poll of analysts forecast Brent averaging US$104.57 a barrel this year, up from US$92.50 in the February poll. In 2012 prices are forecast at US$103.22 and US$106.85 for 2013. These are obviously informed guesstimates, but they indicate that while there is no major upturn predicted, the price is certainly not expected to drop significantly