A 30c/ℓ increase in the fuel levy, another rise in interest rates and new consignor/consignee legislation will all load more costs onto a transport industry that is already struggling to remain profitable, says Standard Bank business vehicle and asset finance head Toni Fritz.
Operators competing for market share in an environment dominated by shrinking profit margins will respond in various ways to the increased costs created by these major changes, she notes.
Small and large operators who will normally consider buying new trucks will now probably lengthen their replacement cycles to avoid the higher costs of replacing vehicles. However, this will have implications on maintenance costs, which increase as vehicles become older.
For smaller operators especially, working on the fringes of the industry and at low margins, these costs could lead to reduced maintenance, which is a concern when the road worthiness of vehicles is taken into account, says Fritz.
Also, coping with an increased fuel price will, most likely, see transport costs being passed on to customers. However, in regions where competition is tough, many operators will be forced to absorb the additional cost – again, with an impact on maintenance and road worthiness, she notes.
One cost that still has to be quantified is the cost of new consignor/consignee legislation that will demand certain standards from transport operators moving more than 500 t of freight a month, says Fritz.
Despite the legislation’s focus on reducing the overloading of vehicles and damage to roads, while also demanding that operators be insured – changes that “are to be lauded” – the costs of adhering to the law will “undoubtedly” have an impact on the industry.
This impact has to be carefully considered in a country where the lack of bulk rail infrastructure forces consignors of goods to use road transport to meet the demands of customers, she notes.
“The practical impact of the legislation is that operators will have to install specialised weigh-bridges to measure axles and axle unit weights, which is a considerable cost for many operators.”
Fritz believes that increased administration costs and time lost through completing “the shopping list of requirements for documentation” will also have cost implications.
“Add the cost of comprehensive liability insurance and the financial pressures become even more onerous.”