The recent marginal decline in the price of some grades of diesel will do little to quell the pressure fleet owners and consumers are facing, Gavin Kelly, CEO of the Road Freight Association says.
This comes as motorists driving petrol vehicles are expected to feel the pinch even further this month after the price of petrol (93 ULP and LRP) increased by 65 cents inland and 58 cents at the coast on Wednesday, while the price of petrol (95 ULP and LRP) rose 67 cents inland and 60 cents at the coast.
The price of diesel (0.05% sulphur) rose by three cents inland and dropped by three cents at the coast, while the price of diesel (0.005% sulphur) declined by one cent inland and eight cents at the coast.
Kelly said the RFA remained concerned that the trend relating to fuel costs remained on an upward trajectory.
“Unfortunately, large sectors of the economy are reliant on fossil fuel energy and related petrochemical products. While a debate can be held around alternative fuel (energy) sources, the reality remains that fossil fuels drive the logistics chains - and will drive these - for some time to come,” Kelly said.
“Where costs are largely external, that is an international price for a commodity; there is very little that South Africa can do to influence this as it is based on supply and demand in the main, and the only options available are other markets or own source,” he said.
Kelly added that the greatest challenge remained the value of the rand versus the dollar in pure currency conversion rates when buying fuel in a foreign currency.
“This, together with demand, keeps the cost of fuel at a high level in South Africa. This means that - for at least the medium term - South Africans will pay a high premium for the movement of goods and people across the country and the consumer will continue to feel the effect of high fuel prices,” he said.
“Each increase does place pressure on those transporters who have very thin margins - and often becomes the ‘final straw’ in keeping a business operating, or not. Where slight fuel decreases are seen, these take as much time to filter through the supply chain as large increases do, and sometimes the decrease is not enough to have offset the multiple increases that have been coming through.”
The RFA is concerned that the trend will result in “more and more marginal transport companies disappearing from the economy”.
Abigail Moyo, spokesperson for the trade union United Association South Africa, said the latest hefty petrol price hikes were making life difficult for consumers.
“Living expenses have become a nightmare for workers who are already bent over backwards to look after their families,” she said.
“The South African Reserve Bank’s decision to keep interest rates unchanged last week brought some relief, but rising fuel prices remain a burden as the ripple effect is felt in the prices of basic needs and services. Workers are also expected to pay more for electricity following Eskom’s more-than-12% price increase yesterday.”
