Truck operators to pass toll costs on to customers, warns RFA

12th August 2011 By: Irma Venter - Creamer Media Senior Deputy Editor

The Road Freight Association (RFA) on Friday said it welcomed the reduction in Gauteng toll fee tariffs as approved by Cabinet this week, but added that it still believed the fees to be “too expensive”.

“For truck operators to stay in business every attempt will have to be made to pass on these costs to customers and, ultimately, consumers,” warned the association in a statement.

The RFA represents a large percentage of South Africa’s truck operators.

Using various real-life examples, the association noted that medium and big trucks would end up seeing an 11% increase in costs for deliveries made in Gauteng.

It also warned of the effect of e-tolling on small and medium operators.
A truck operator picking up a container at City Deep and delivering it in Kya-Sands would travel 73 km – including the return leg – on the Gauteng Freeway Improvement Project (GFIP) network, explained the association. These operators were typically small and medium operators earning R1 800 a pickup.

“With the profit margin being as low as 2% (75c/km) and with the proposed toll fee of R2/km, this will lead to the death of already struggling small businesses,” noted the RFA. “Small businesses can often not leverage the bargaining power of large operators, and if they are unable to transfer these costs [to their customers], the resultant effect will be the closure of small operators.”
The courier industry would also “be hugely affected” by the rollout of e-tolling in Gauteng, stated the RFA.

“On average a courier vehicle – bakkie – from Isando to areas in and around Johannesburg travels 150 km a day on the etoll network. Average toll costs will amount to R60 a day, which is equivalent to a 17% increase in costs.

“For an operator with a fleet of 100 bakkies this would cost approximately R100 000 per month, which is a huge cash outlay for any business.”
It was a misnomer that the savings in maintenance cost as a result of the GFIP roads would outweigh the costs of the tolls, added the RFA.

“Not all the routes traveled by trucks are well maintained, which results in high maintenance costs once off the toll network. Any savings gained from the GFIP will merely offset some of these costs.

“The idea of one good road among many bad roads cannot alone bring a major change to the maintenance costs of trucks.

“Congestion will in all likelihood increase on other roads as people and firms may not be willing or able to pay for the GFIP.”

The RFA also argued that even if reduced congestion on the GFIP meant that an operator could make an additional daily trip, the high costs would sterilise this opportunity.

The RFA suggested that a further reduction in toll fees was possible if government were to finance R1-billion of GFIP costs for each of the following two years, after which the financing would reduce to R500-million for two years. Following this, the toll could increase again.

“In this period Gauteng could increase spending on public transport, as well as road infrastructure, so that after four years there would be suitable alternative routes and an efficient public transport network.”

The RFA also questioned why Gauteng was spending R469-million on roads in the 2011/12 financial cycle, while KwaZulu-Natal would spend R1.98-billion over the same period.

“There must be a very good explanation as to why the busiest province with the most vehicles spends less than a quarter of the budget allocated by a poorer province on road infrastructure.”

The RFA also highlighted the increasing costs the truck industry already had to face in recent times.

These included a nine-day strike in the freight industry earlier this year, a 34% increase in licence fees in Gauteng, while cross-border operators had seen a 1 000% increase in permit fees. The overall cost of business also increased and included escalations in electricity prices, municipal rates and taxes, fuel taxes and employment costs.

“Should business not be in a position to afford these toll tariffs due to the serious cash constraints, truck operators will have no choice but to start looking at retrenchment strategies, downsizing of operations and ultimately closure,” reported the RFA.