Record fuel price increases have highlighted South Africa’s heavy dependence on road freight and liquid fuels, and the need to fix freight rail and explore alternatives such as battery-powered vehicles.

That is the view of the Cape Chamber of Commerce and Industry and the Road Freight Association (RFA), which this week issued stark warnings after record fuel price increases.

Wholesale diesel increases, to more than R32.00 per litre at the coast and R33.20 inland, are indications that the price may rise further before the end of the year.

Freight operators weigh options

RFA CEO Gavin Kelly says the price increase could push transporters to make operational changes.

“It is safe to say that any transporter will look at fuel consumption (the only ‘real’ method to cut fuel costs), and this could result in various options being considered: different types of vehicles used, different operating hours (eg less congestion), different routes, different loading and offloading scheduling, driver behaviour, and a move to battery electric vehicles.”

Pressure on fruit exporters

Terry Gale, chairperson of the Cape Chamber’s Product Business Environment Portfolio Committee, said the increase came at a critical time for local exporters.

“As the deciduous fruit season starts within the next two months and the first grape exports begin within weeks farmers face immense difficulty calculating cost-to-market in an ever-changing landscape.”

Gale said the increase in diesel prices will ultimately affect everyone, as most of the goods are moved by road in South Africa. Transporters are forced to add fuel surcharges — extra fees to cover rising fuel costs — that can add 50% or more to their standard rates, and these fluctuate monthly.

“South Africa currently has no active refineries to absorb these cost increases, leaving us exposed to international supply shocks despite sourcing fuel from non-Middle Eastern markets.”

Call for return to rail

Gale says these supply chain pressures reinforce why the Department of Transport is advocating for a return to rail to connect key industrial areas and freight routes — including Durban, Ngqura and Cape Town — directly to Gauteng.

Cape Chamber CEO John Lawson said the fuel crisis could refocus attention on finding road freight solutions.

“Because rail is not working, it means we have more trucks on the road than we need to have to transport goods. The increased fuel cost means that all our input costs will increase, and it also adds a cost in terms of road maintenance.”

“What this all means, however, is that we need to focus on solutions. Rather than wait for the next increase, we need to become more resilient and less dependent on particularly diesel.”

Further increases likely

Kelly said pressure on supply chains was likely to intensify.

“Unfortunately it is difficult to completely rule out further fuel price increases; already there are indicators that South Africa is heading towards further fuel price increases in November, should the tensions in the Middle East not be resolved. The ongoing geopolitical tension and the surge in risk, coupled with the supply and demand factor, adaptability will continue to be vital for South Africa’s freight sector.

“Transport companies’ strategies for navigating this increasingly unstable operating environment will continue to be shaped by limiting fuel use, enhancing operational efficiency, and preparing for unpredictability.”

“One thing is certain: In a country that is dependent on road freight, such as South Africa, every adjustment in the price of diesel has consequences extending past the petrol pump; it goes deep into the transport systems that keep the country running.”

Kelly said logistics companies were trying to reduce costs through operational adjustments. He said the freight sector also held serious concerns about illegal fuel blending and dirty diesel entering commercial supply chains to undercut legitimate operators.

Poor households hit hardest

Dr Adrian Strydom, executive director of the South African Oil and Gas Alliance (SAOGA) and Cape Chamber Council member, said the impact on low-income households and the country’s energy security was a major concern.

“Energy security is an important issue for South Africa, as an escalation in the fuel price will have a far-reaching effect on our economy. Transportation and manufacturing costs are particularly vulnerable, and everyone will feel the pinch.”

“A sharp rise in fuel costs hits the poorest of the poor hardest through higher food prices and potential job losses. This underscores why South Africa must explore local oil and gas resources rather than spending billions annually on foreign imports while missing out on domestic-employment creation.”

Business stakeholders have urged government to consider measures to cushion economic sectors from international price shocks while accelerating rail and energy infrastructure reforms to keep national supply chains running.

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