Consumers will feel pain after fuel hikes kick in

JOHANNESBURG – Consumers and road freight transporters will feel the pain in their pockets when the expected fuel price increases take effect in March.

“There are dire forecasts of large fuel increases heading towards the economy in March, diesel by at least R1.40 for 500ppm and R1.50 for 50ppm. The price of petrol, 93 and 95, will increase by at least R1.30 per litre,” Road Freight Association CEO Gavin Kelly said in an article published in Supply Network Africa magazine.

Road freight companies, which transport a significant share of goods across the country, will face the prospect of having to increase their prices to offset the higher cost of diesel.

Kelly said transport companies would find it difficult to purchase diesel at higher prices while awaiting payment for goods already transported. Some customers take up to 90 days to pay.

As transport costs escalate and consumers’ disposable income dwindles, some businesses may respond by reducing the volume of stock being transported, further knocking the industry.

COST

“Fuel is fast crossing the 50 per cent mark in daily transport operating costs (depending on type of transport operation), which remains a high operational input cost for any company or business that requires goods to be transported,” said Kelly.

“That cost will, in most cases, be borne by the consumer, who will continue to feel inflationary price pressure in the short to medium term (subject to how long high fuel prices are around).

“In the short term, general transport costs will rise, from food to fuel, from clothing to electronic goods and everything in between. There will be the inevitable price escalations, some immediately, but more so a domino effect will ensue — the next in a long line of such domino effects we have seen too often in the past few months.”