Without a smooth and efficient supply chain, South African industry doesn’t function, simple. You just have to look at the impact on the retail companies during and after the July riots to recall how parts of the country all but ground to a staggering halt owing to a broken supply chain.
Riots aside, however, something that no business outside of the petroleum sector can change or avert impacting on the supply chain, is the cost of fuel.
Over the past decade, the cost of fuel has risen alarmingly, causing devastating impacts on freight management companies and the dependent supply chains.
Fuel comprises the lion’s share of every freight company’s operation, more so since our rail system is all but defunct and road transport is the order of the day. Truck convoys now account for about 80%+ of goods transported.
Even though CV-19 (and the associated ongoing curfew) has been blamed for the sometimes-irregular movement of freight, logistics companies have continued to supply retailers.
However, there is an anticipated monster fuel hike coming…
With hikes in diesel and illuminating paraffin anticipated to be the largest in South African history in the pipeline (pun intended), according to the AA, “R20 a litre for petrol is now a realistic scenario before the end of 2021.”
As the price of fuel increases, carriers will be required to increase their prices or take knocks and when companies are faced with rising costs, they generally cut back on the frequency of their services.
The roll-on effect tumbles right down the line as every link in the supply chain increases its price to accommodate a hike in transport costs. And our future looks bleak.
AA spokesmen say the current forecast shows petrol rising by 99 cents per litre. Diesel and illuminating paraffin will increase, too, by a whopping R1.42 per litre. This price hike will push 95 unleaded (ULP) inland above R19 a litre (close to R19.30/l in most instances). As diesel is unregulated, it’s expected to cost around R17 a litre at some forecourts.
Taking this potential increase into account, the price of a litre of fuel inland (95 ULP) will have increased from R14.86 per litre in January 2021 to R19.30/l in November 2021 – a 30 per cent increase over 11 months. – Source News24
Fuel price increases 2021
| Fuel Price | Date |
| R 14.69 | 06-01-2021 |
| R 15.50 | 03-02-2021 |
| R 16.15 | 03-03-2021 |
| R 17.10 | 07-04-2021 |
| R 17.01 | 05-05-2021 |
| R 16.91 | 02-06-2021 |
| R 17.20 | 07-07-2021 |
| R 18.11 | 04-08-2021 |
| R 18.15 | 01-09-2021 |
| R 18.11 | 06-10-2021 |
Source: AA South Africa
Wouldn’t it be great if we could just say to the petroleum industry “Oh, go take a hike!”
… or maybe not, in this case…
