How fleet managers can save as fuel goes up
The minister of finance’s announcement in his budget speech regarding the increase in the carbon fuel levy and the forthcoming proposal for the second phase of the carbon tax is poised to have profound implications for the fleet management industry.
The hike in carbon fuel levies will inevitably increase the operational costs of fleet management companies. With the rise in fuel prices, organisations will grapple with heightened expenses in fuelling their fleets, potentially resulting in diminished profit margins unless counteracted by strategic cost-saving measures.
According to the Mordor Intelligence report, in South Africa road transport represents about 63% of all freight ton kilometres. Efficient fleet management is therefore integral to sustaining the economy by ensuring smooth logistics and delivery services. However, a key determinant influencing the dynamics of this industry is the price of fuel.
Fuel management has historically posed a challenge for fleet operators, but in 2024 a notable trend is anticipated in the adoption of intelligent fuel management tools. These innovative solutions offer real-time monitoring and optimisation of fuel consumption, thereby cutting operational costs and fostering efficiency.
The significance of data and reporting, particularly when coupled with the integration of advanced telematics systems, optimise fuel consumption. This, including the implementation of driver training programmes to promote eco-driving techniques and incentivising drivers to refuel at low-cost providers, emerge as pivotal strategies in saving costs.
The significance of telematics tracking cannot be overstated. By harnessing telematics, fleet managers gain invaluable insights into vehicle and driver performance, enabling informed decisionmaking that optimises operations and bolsters productivity. Moreover, in an increasingly remote work environment, the demand for remote fleet management solutions has become more pronounced. Comprehensive fleet management software facilitates seamless communication and real-time monitoring of fleet assets, irrespective of geographic location.
Various factors, including currency fluctuations, influence the final fuel price, which is further compounded by additional charges such as levies, taxes and margins at the pump. This unpredictable pricing of fuel underscores the importance of fuel cost management and sustainability in the fleet management industry. Fleet managers will need to adapt to these changes proactively, seeking opportunities to improve efficiency, reduce costs and navigate evolving regulatory landscapes to ensure the continued success of their operations.
The reason for the monthly changes in fuel prices in South Africa is primarily attributed to the basic fuel price (BFP). This BFP, which is mainly influenced by fluctuations in crude oil prices and changes in the rand/dollar exchange rate, is calculated daily, and the monthly average adjustment is incorporated into the subsequent month’s pricing. In contrast, other elements of the fuel price are typically reviewed yearly. This constitutes the fuel levy, which is a government tax, along with the Road Accident Fund levy, serving as insurance for all road users. Collectively these components make up about 40% of the petrol price. Wholesaler margins, along with various smaller price elements, amount to about 3% of the overall fuel price.
Staying abreast of these trends will be paramount for organisations seeking to flourish in fleet management. Embracing innovation and leveraging advanced technologies will optimise operations and pave the way for sustainable growth and success. Fleet management companies will also need to monitor the development of the second phase of the carbon tax and actively engage in the public comment process. Understanding the potential regulatory changes and their implications will be essential for effective long-term planning and compliance.