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Road Freight Association raises alarm over fuel price hikes

File Picture: Ian Landsberg African News Agency (ANA)

File Picture: Ian Landsberg African News Agency (ANA)

Published May 19, 2022

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DURBAN - The Road Freight Association (RFA) in a statement on Thursday said that no one would have anticipated the fuel price increases that have occurred over the past six months.

Gavin Kelly, RFA CEO, said the oil price has risen to $114 (around R1 800) per barrel mark, the rand is trading in the R16 range (or so) and the effect is a rocketing price for fuel in South Africa.

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“It has an impact on every single item that is transported to and across South Africa.”

Kelly added that the fuel price would also affect the shipping industry, he said this coupled with constraints in the global logistics chains would lead not only to delays, but also to demand, which has an upward price-pressure effect.

He said that once goods are landed, they then find their way to either consumers or manufacturers via the road transport network, and that was where the next leg of the logistics journey was impacted by fuel price increases.

“We have all felt, and will continue to feel for some time, the effects of more expensive fuel.”

Kelly added that the “perfect storm” is looming with the oil price and rand value vis-à-vis the dollar being what they are.

He said there are reports that the fuel price for June will see an increase of between R1.70 to R2.00.

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He added that the “relief” offered by the government to reduce the level of taxation on the price of fuel (by around R1.50 per litre due to the reduction of the General Fuel Levy) is due to fall away at the end of May.

“This means a price increase of around R3.20 (a rough estimate, given all that is currently in play) by the first week of June. We cannot afford that. Or any other increases. The first signs of despair and retreat will be within the road freight logistics sector.”

Kelly added that already, some transporters had closed their doors due to the effects of the Covid-19 pandemic.

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“Financial pressures have remained on the increase, and the unrest that continues to ferment, radically shown by the violent period in July 2021 when the whole logistics chain was attacked, continues to wear down companies and cause more closures. Operating costs within the road freight and logistics sector have continued to increase exponentially, with many of these increases coming at a time when the road freight industry can least afford, or withstand, these shocks.”

Kelly said that transport companies cannot keep facing the continual increases in operating costs and the recent fuel (diesel) price increases have become the final “nail in the coffin” for many transporters.

He said that solutions to the fuel crisis could include:

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– An agreement between African states producing oil (or refined products) for a far lower rate for African countries in the spirit of the Africa Continental Free Trade Agreement and to ensure African economies do not collapse .

– Concentration by Sasol to produce far more fuel

– Development and growth of the synthetic fuels industry in South Africa – from all possible sources.

– Development of electric transportation devices and supply.

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