A Road Freight Logistics Perspective on the Latest Fuel Price Decrease – What it Means for South Africa
On 5 November, the cost of diesel for transporters decreased by 21 cents per litre for 500ppm (19 cents for 50ppm). However, the price of both grades of petrol (93 and 95) decreased by 39 cents per litre. The CEF attributed the price cuts to an appreciating Rand against the US dollar (on average R17.29 compared to R17.49). This has directly led to lower basic fuel prices on petrol, diesel and illuminating paraffin.
What does this mean – transport costs are beginning to head south (i.e. becoming less expensive) from the incredible highs seen during the year, but fuel prices are still 21,4% 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.
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 R820 less for every complete refuel (for 500ppm diesel). When this is multiplied by the number of vehicles and trips (refuels) a transporter has, the savings add up and release pressure on cash flow.
Fuel was at the 41% mark in daily operating costs during the third quarter of the year, and now as we head into the final month of 2025, this should head back below the 40% mark. That is extremely good news – but we need it to drop further.
The resultant downward pressure on transport prices will 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 (unfortunately not at the same high continuous rate as the increases were) will take some time to be felt by consumers (you and I) as the cost to transport goods slowly decreases.
As noted, there will be some immediate consumer relief at retail points – however, as fuel continues to decrease in price, that effect will be felt by the consumer.
You and I will pay less for everyday goods - from food to fuel, from clothing to electronic goods and everything in between. As fuel prices start to fall, a domino effect will ensue, hopefully the first in a long line of such domino effects that will bring about a steady decrease to the “cost of living” as regards consumer items.
The bigger effect of falling fuel prices and retail process, is that the basket of goods used by the Reserve Bank to alter the Repo Rate will reflect a different picture / value of inflation monster, and this will bring about a better financial experience for consumers.
Continued and sustained fuel price reductions will definitely have an effect on inflation.
That is good news for everyone indeed.
Finally - this may not be as bountiful a Festive Season as it has been in the past – but there are signs that things are going to get better. The recent GDP figures showed a better picture than expected and the trend in fuel prices will definitely be a help to improve those figures too.
By Gavin Kelly, CEO of the Road Freight Association
Gavin Kelly, CEO of the Road Freight Association
Issued by
Name: CVLC Communication
Contact: Catherine Larkin APR CMILT
Cell phone: 083 300 0331
Contact: Catherine Larkin
Email:
Website: www.rfa.co.za
About The Road Freight Association
The Road Freight Association was established in 1975 to support its Members who are, in the main, road freight operators. It is a lobbying and negotiating body which influences the state of the industry, rates, upkeep of the road infrastructure, road safety, freight security, driver interests, cross-border transport, education, health, the fuel price, law enforcement, labour relations and many other issues related to road freight transport.
Member companies include small and medium-sized trucking companies, including many family-owned businesses, owner operators, as well as most of the largest trucking companies in South Africa. Members come from all sectors of the trucking industry.
Private and public operators are Members of the RFA. Membership also includes a significant number of affiliates and associates – those companies providing goods and services to the trucking industry.
Team RFA (made up of support staff and experts) is committed to serving you. The team brings with it a high degree of professional experience, knowledge and dedication – which greatly contributes to the effectiveness, relevance and standing of the RFA.
As the voice of the trucking industry in South Africa, the RFA is your voice. It is important that you avail yourself of that opportunity to be heard
