The stiff 27c-per-litre increase in the fuel levy announced by Finance Minister Tito Mboweni is going to bite the country hard, not just on the consumer side of supply but also insofar as the cost escalation will have to be absorbed by the transport sector.
Commenting on Mboweni’s budget speech in parliament yesterday, Road Freight Association CEO Gavin Kelly said the increasing and expanding cyclical pressures on consumers would see traditional government revenue streams shrink for the immediate future, which would impact on domestic consumption.
“This will affect freight volumes and will drive many transporters who are close to the sustainability margin over the edge.”
He added that the increase in fuel taxes would also dampen available disposable funds and could see even less revenue generated through the fuel levy and road taxes.
In addition, suppression of transport demand could be expected as business-related travel continued to be impacted by the coronavirus and the labour market’s remote working response to the pandemic, Kelly said.
“Freight operators are going to need to be inventive, cost-centre aware, and will have to develop innovative multi-customer and multi-load offerings to stay competitive.
“Overall, it’s a very tight budgetary outlook for the road freight and logistics sector in the next few years with margins being cut even further.”