Durban – The Road Freight Association (RFA) has welcomed the drop in the price of both grades of diesel.
For diesel 0.05% sulphur, the price decreased by R1.57 a litre, and diesel 0.005% sulphur dropped by R1.52 a litre. The RFA said this would drop retail pump prices to R24.23 and R23.92, respectively (inland prices).
Gavin Kelly, RFA CEO, said that the Central Energy Fund (CEF) attributed the price cuts to an appreciating rand.
He said while they noted the increase in petrol of 59 cents per litre, with the decrease in the cost of diesel, transport costs were starting to head south from the incredible highs seen during the year.
“But fuel prices are still 33.4% higher than what they were this time last year. We have a long way to go to bring the cost of logistics down to a far more palatable and sustainable-level.”
Kelly said the realities of how transporters acquire diesel, how this is paid for, and the delays in being paid for the work done, still remain true.
“There will be less pressure on the guarantees and daily refuelling cycles. In a simple scenario, a truck with two 500-litre fuel tanks will now pay R1 530 less for every complete refuel of 500ppm diesel. When this is multiplied by the number of vehicles and refuels trips a transporter has the savings add up and release the pressure on cash flow.”
Kelly said that fuel breached the 58% mark in daily operating costs during the third quarter of the year.
“Now as we head into the final month of 2022, this should head back below the 50% mark. That is extremely good news – but we need it to drop further.”
He said the resultant downwards pressure on transport prices would also begin to flow through the logistics supply chains.
“Some price relief to be felt by consumers will take longer than others, depending on stock on shelves at previous transport rates, and the types of transport service contracts between clients and retailers.
“The continuous increases in the price of diesel has driven the cost of transport and logistics up to unimaginable levels, and with roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, the recent set of fuel price decreases will take some time to be felt by consumers, as the cost to transport goods slowly decreases.”
The South African Association of Freight Forwarders (SAAFF) said it welcomed the decrease in diesel prices, as fuel costs typically constitute the most significant daily operational expense within the transport and logistics industry.
“However, as is the case with the current inflation realities, the preceding months have already taken their toll on the industry. Moreover, the price increases came after the industry experienced its peak seasons (October for ocean freight and November for air freight).”
SAAFF added that ultimately, with the massive increases in container freight rates, air freight rates, and overall transport costs, the industry experienced a challenging year.
“Nevertheless, any significant decrease in costs is always well-timed. Therefore, SAAFF looks forward to relief in inflationary pressures ahead, as we can but hope for policy certainty, commodity price moderation, and industry normalisation in 2023,” their statement said.