Fuel price stalls big truck movements as rail gets its chance

“PROJECT CARGO transport is more competitive today than it was five years ago,” Arnold Reddy of Reddy Cargo Services told FTW. “More companies are redefining the business as a highly specialist niche, but the trick is to have the project cargo side complement your normal freight operations.” Along with the rest of the industry, this ‘highly specialist niche’ cannot escape the mounting fuel costs currently holding the industry to ransom. "The cost of moving a 12m container from Durban to Gauteng has increased over R1000 compared to rates from before the start of March this year, as the third consecutive diesel price hike strikes at the heart of haulier business around SA. "Hauliers looking to attract business with lower rates will shut down in three months with the way operating costs are rocketing at the moment," Reddy said. “Diesel costs account for more than 50% of a haulier’s operating costs these days,” he said. “And those who try to sway or entice clients with lower rates in the hope that the extra business will cover their losses will fall short as the fuel costs will simply outstrip any income. “A lot of owners are not sitting down to the day-to-day operating costs each and every day,” Reddy said. “They believe that as long as the truck is on the road, you are making money. The rising price of crude, however, coupled with the interest rate hikes, will certainly impact negatively on companies running on credit.” The company will give rail a trial run over the next few months since the rail tariff is much more attractive, says Reddy. "Only time and the service levels of rail will determine the future of the long-haul market,” he added. “We have a number of long-haul vehicles “resting” at the moment while our rail exercise plays out, but if the client is willing to pay the extra road costs, then only will we put more vehicles on the road.”