South Africa’s road freight operators will get some short-term relief from lower diesel prices this month, but wider fuel-price pressures continue to weigh on the broader supply chain and consumer market.
The reduction in the diesel price is a “welcome, if partial, reprieve for long-haul freight operators”, says Road Freight Association (RFA) CEO Gavin Kelly. However, he cautions that because diesel accounts for between 30% and 50% of a typical operator’s total cost base, the industry remains highly vulnerable.
Diesel prices dropped by up to R3.25 per litre on Wednesday, bringing much-needed relief to heavy commercial fleets and transport sectors. By contrast, petrol prices for both 93 and 95 octane grades increased by R1.43 per litre, driving inland 95 unleaded petrol to a record R28.06 per litre.
The R1.43/l petrol hike will severely affect lighter commercial fleets and logistics staff. “When household budgets are under pressure from rising petrol prices, the knock-on effects on consumer spending and freight demand are real,” Kelly says.
Underlying structural factors, such as the R0.35/l increase in the slate levy and the halving of the general fuel levy relief, have diluted the savings, he says. “Together, these factors mean the net benefit to operators – and therefore the reduction in fiscal pressures across the greater economy – is considerably smaller than it first appears.”
The petrol price hike means a R71 increase in the cost of filling a 50-litre tank while the price of diesel means it will be R162 cheaper to fill the same-sized tank, says Ester Ochse, FNB head of integrated advice product.
From an agricultural logistics perspective, the diesel price cut is a “positive development for the agriculture sector” as it lowers transport and input costs ahead of an expected record summer crop harvest, says Paul Makube, FNB senior agricultural economist.
“The RFA calls on the Department of Mineral and Petroleum Resources and National Treasury to address the growing slate deficit with a credible long-term plan, to manage the withdrawal of fuel levy relief in a structured manner, and to pursue reforms that reduce the sector’s vulnerability to external price shocks,” Kelly says.
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