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A Road Freight Logistics Perspective on the Latest Fuel Price Increase – What it Means for South Africa

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A Road Freight Logistics Perspective on the Latest Fuel Price Increase – What it Means for South Africa

As at 02 November 2022, the cost of diesel for transporters increased by R1,42 for 500ppm and R1,43 for 50ppm. That will raise the prices to R25,49 and R35,75 respectively.

The price of both grades of petrol – 93 and 95 – will increase by 51 cents per liter.

The Central Energy Fund (CEF) attributed the price hikes to rising international fuel prices and the weakened Rand.

What does this mean? Well, to put it in perspective, diesel cost R12,15 and R21,78 in January 2022. Diesel has doubled (increased by 100%) since December 2021.

Road freight transporters use – in the main – diesel as the energy source for their vehicles. They need to increase their pricing to cover the ever-increasing cost of diesel, and there are transporters who will not be able to carry on. This will be driven by the transporters’ need to fund operations (the use of fuel) whilst only being paid months after the work has been done – ins some cases up to three months afterwards.

In the meantime, the next load needs to be moved, and so on, and that all needs fuel for the vehicles. There just aren’t limitless reserves of cash to continue the high level of fuel expenditure against the delayed payment for work already done.

In some cases (and we are beginning to see more and more businesses in stress/business rescue), customers/businesses will reduce volumes to be transported or even curtail stock movement – depending on consumer consumption levels. Transporters will feel this impact on their businesses. Many transporters will not be able to muster the guarantees required for purchasing fuel on credit (required as customers take up to 90 days to pay AFTER the transport has been provided) – and the transporter has paid for fuel, paid the driver, covered other costs and still needs to operate a business – whilst others just don’t have any cash to carry themselves for 90 days.

Whether we like it – or not – the continuous increases in the price of diesel inevitably drives the cost of transport and logistics up – step by step – and, with roughly 85% of all goods moved through and around the country having a road leg at some part in the journey, there will be increases to consumers, (you and I) as the cost to transport goods increases.

Fuel breached the 55% mark in daily operating costs during the third quarter of the year, and now as we head into the final month of 2022, are already hovering around 60%. That’s a cost to company (any company or business that requires goods to be transported to manufacturing/processing/packaging/staging/distribution or retail operations) that cannot be borne by the company.

That cost will – in most cases – be borne by the consumer. You and I will pay more for – well – everything. From food to fuel, from clothing to electronic goods and everything in between. Prices will rise – some immediately, but more so a domino effect will ensue, the next in a long line of such domino effects that we have seen too often in the last few months.

Transport costs will rise. There is no alternative for transporters – and those that cannot afford to carry loads at the rates or prices customers are prepared to pay, will simply close down.

More business closures, more unemployment, less business and revenue driven through the transport sub-sector industries, and of course, higher prices at the till.

As we have experienced, the Reserve Bank has aggressively increased the Repo Rate in an attempt to restrict the inflation monster, and signs are pointing to another stiff repo rate increase in November (at least 50 basis points – if not another 75 basis points). That, together with transportation costs for goods and services, will grip the consumer in a tightest financial squeeze just before the festive season – where traditionally many retailers have generated income to carry them through the financial year.

This will not be a bountiful as it has been in the past, and there are many consumers who will “stay at home” and cut the “lavish spending” associated with the Festive Season.


Emerging Transportation Innovations to Watch out for in 2021

As technology continues to develop, new trends emerge. While driving AI is still not advanced enough to give us fully automated vehicles, there are other trends that stand to change the transportation industry as we know it. So, to get a better understanding of where the industry is now, let’s take a look at some of the more notable trends. Here are emerging transportation innovations to watch out for in 2021.

Emerging transportation innovations

While the pandemic has impacted the transportation industry in general, the development of new technologies hasn’t slowed down at all. People have recognized that the setbacks were temporary. Some areas of transport, like medical equipment shipping, even grew due to increased needs. So, it is fair to assume that the transportation industry as a whole will continue to develop. Seeing how there are numerous innovations in electronic vehicles, eco-friendly fuels, logistic systems, and automation still in development, we cannot cover all of them. To keep a certain sense of scale, we will focus primarily on the innovations on the rise in 2021.

V2X communication

One of vehicle technology goals is that all vehicles have constant, seamless data change with their HQ. Ideally, this will include not only things like location and speed but also vehicle state, health, and fuel. While we have not yet achieved such a high level of communication, we have made significant steps toward its development.

One of those steps is the FCC ruling in November 2020 regarding V2X (vehicle-to-everything communication). To put it simply, it requires the 5.9 gigahertz band to allocate 75 megahertz for cellular V2X communication and Wi-Fi. Initially, the FCC used this band exclusively for DSRC (dedicated short-range communication) since 1999. Cellular V2X (C-V2X) is just like V2X. The only difference is that it contains two transition modes. Vehicles use the first one to communicate with other vehicles, as well as pedestrians and infrastructures. The second one enables them to connect to the cloud network. This allows drivers to get information about available parking, potential traffic issues, etc. If you want to research it more, know that the development of the 5G internet is closely connected to C-V2X.

Federal transport funding

While the private sector knows that the effects of COVID-19 are temporary, the federal government doesn’t hold such views. Due to lack of travel in 2020 and 2021, the government has decreased funding to the transportation industry. How big of an impact this will have on the overall trading industry is hard to say. After all, commercial transport is still in high demand. Still, it is hard not to notice the substantial cut to funding.

Touchless activation

Once the COVID-19 pandemic started, one of the first things we’ve learned is that the virus can spread through physical contact. Apart from people disinfecting their hands and avoiding touching, this has also motivated the transportation industry to find as many touchless alternatives as possible. As a result, we have iDetect activation, where people can wave their hand in front of a sensor instead of pressing a button.

Furthermore, FLIR and TAPCO have partnered up to provide FLIR thermal activators for all pedestrian crosswalk systems. As the name suggests, this system uses thermal activation instead of physical contact to activate crosswalk signaling. Finally, we also have infrared bollards to help those that cannot reach the alert systems with such ease. These bollards automatically scan for vulnerable road users and set the necessary systems in motion.

License plate recognition

The final notable advancement in transportation (more specifically vehicle) technology is license plate recognition. Law enforcement especially has made great use of emerging license plate technologies in 2021. AI systems can load and check a license plate within seconds. This makes checking up on suspicious vehicles, both during the drive and while stopped, much safer, faster, and efficient. Even parking fines have become automated in certain countries as police vehicles simply drive through the city and gather info via video. Once these technologies become more available, we are sure that the logistics companies will find a good use for them. But, for now, they are more than useful for law enforcement.

What the future holds for transportation

While the emerging transportation innovations show much promise, they are only a glimpse of what’s to come. Before long, we won’t be surprised that there are individual vehicles and entire fleets of fully automated transports. We will probably first see these automated vehicles in trains and ships, as there are fewer variables to keep track of there. But, as the self-driving AI progresses, we are bound to see self-driving trucks, cars, and planes. Keep in mind that it’s in AI’s nature to develop exponentially. So, once it starts advancing, it is only going to speed up over time. Therefore, if we get rudimental self-driving AI within ten years, fully automated vehicles two years after that shouldn’t be surprising.


Another trend to keep close track of is the development of logistics. More and more, logistics is becoming automated. After all, gathering and processing all necessary info for logistics far surpasses the capabilities of any human. While logistics managers simply use these systems to plan their routes, we won’t be surprised if logistics systems become better at planning. Remember, most logistics decisions are based on prior learning and predictions. So, the better a model we can create for logistics, the sooner the AI can start learning. And once it does, keep in mind the exponential development.

Fuel alternatives

When talking about emerging transportation innovations, it’s important to mention innovations in fuel and energy. While electric vehicles seemed impossible just a decade ago, Elon Musk proved everyone wrong with his Tesla company. While there are no huge updates in the industry, it is essential to note that it is growing. Eco-friendliness is, as it should be, a major concern for developed countries. With luck, we should see a general decrease in fossil fuels and an increase in greener options.


Jacob Sherman has worked in the transport industry for over 20 years, mainly helping moving companies like Zippy Shell Louisiana with logistics and planning. Now, he uses his experience to write insightful articles about the transportation industry. In his spare time, he enjoys cooking for his family and going on long hikes.