LISTEN: ‘High diesel prices will hurt businesses’ – Road Freight Association

The Road freight Association of South Africa (RFA) has warned that the increase in the diesel prices will hurt many businesses in the transport sector.

Petrol and diesel

On Monday, the Department of Mineral Resources and Energy (DMRE) announced that 93 octane petrol would decrease by 89 cents per litre, and 95 octane by R1.02 per litre from 5 October.

However, there was no good news for diesel users with an increase of R0.10 cents per litre for diesel with (0.05% sulphur) and R 0.15 per litre for (0.005% sulphur) content.

ALSO READ: Good and bad news as petrol drops but diesel goes up from Wednesday, 5 October

Diesel

Gavin Kelly, CEO of the Road Freight Association (RFA), said diesel is the fuel source that is used by most transport companies in South Africa.

“It is the energy source that drives our logistics chain and every time it increases, it increases the cost of moving goods through South Africa and across South Africa.”

Kelly acknowledged that the RFA is aware that diesel price is determined by external factors.

“However, the reality is every time that price increases, transporters have to pass that cost on, they cannot absorb it. There are some transporters who are now on their knees, they do not have the resources to buy diesel and stock or to even use credit lines to purchase diesel.”

Transporters struggling

“Transporter find themselves in a very, very tight spot. More often than not, they do trips, they transport goods, they deliver goods and only receive payment up to 90 days after the fact. They need to carry that cost of diesel.”

Listen to the comments by Gavin Kelly

Recession looming

Meanwhile, while economists said a recession is looming, all the economic information for the third quarter of 2022 is not available.

None of the information so far bode well, but one economist said South Africa should not worry about a technical recession, but rather about the long-term slump the country has been in since December 2013.

Additional reporting by Ina Opperman

ALSO READ: Recession looms but what about the long-term slump?