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