Road transport is the bloodstream of the country that keeps the economy alive. Over 87% of all goods transported in South Africa travel by road, as the rail system is inefficient and unreliable. This has resulted in relatively high logistics costs (13.5% of gross domestic product) in South Africa, which hampers economic growth.

Between 2008 and 2009, South Africa managed to reduce the cost of logistics from 14.7% to 13.5% of GDP. But with the government’s intent to target the trucking industry as an easy source of revenue, the resultant increase in costs for road freight operators is likely to reverse this trend and increase the cost of logistics.

Even so, road transport offers numerous advantages to customers. It is reliable, efficient, affordable and dependable, and can offer door-to-door service. Goods reach their destination on time, every time. It is the South African customer’s transport mode of choice.

The road freight industry is under attack, however. The Department of Transport, South African Revenue Service (SARS) and local municipalities are piling on a heavy load of road tolls, levies and charges that directly impact road transport operators, simply because the sheer number of operators and their vehicles presents a captive source of easy money.

The government uses this revenue to shore up decaying infrastructure such as the railways, which accounts for less than 15% of freight inside South Africa. Yet, the country’s secondary road network continues to go without adequate maintenance and repair. In fact, the government is considering erecting tollgates on these roads, too.

It is the prerogative of any business to keep costs down and ensure the smooth and efficient running of its operations. The recent spate of new revenue-generating legislation tends to undermine these objectives and will certainly have serious implications for operators, particularly small businesses.

Increased operating costs

The year 2011 has been challenging for the trucking industry, with skyrocketing electricity costs, municipal rates and taxes, fuel taxes, high employment costs, the proposed carbon tax, tyre disposal levies, the cost of reconfiguring trailer fleets to carry ‘high cube’ containers, massive hikes in cross-border fees, increased fees for dangerous goods, incident management fees and vehicle licence fees. All these government-instigated costs are adding further strain to embattled transporters and their ever diminishing resources.

Many of these operators, particularly small, medium and micro enterprises, are not in any position to absorb these costs; and their clients are unlikely to willingly pass them on to their clients. They would probably source a cheaper, and larger, transport operator.

Gauteng toll fees

While the Road Freight Association (RFA) welcomes the marginal reduction in e-toll tariffs for the Gauteng Freeway Improvement Project, it still believes these tariffs are ridiculously expensive. Initial projections indicate that the toll fees will cost the trucking industry an additional R70 million per month – and that is merely from the Gauteng routes!

Research undertaken by the RFA indicates that the toll fees will bring an immediate 11% increase in costs for local delivery vehicles. The courier industry’s costs will increase by a shocking 17%. For truck operators to stay in business, every attempt will have to be made to pass on these costs to customers and, ultimately, consumers.

AARTO

The RFA has been a key driver in the National Economic Development and Labour Council process around the proposed amendments to the points demerit system. The association has been instrumental in securing numerous concessions in this matter:

• Operating licences and cards will no longer be suspended or cancelled;

• All vehicles will have a 12-point threshold irrespective of fleet size;

• All triple fines for operators have been removed;

• The 3 475 offences originally specified have been reduced to 1 250;

• Clear definition must be given to charges for offences (e.g. roadworthy);

• Points: agreement to a uniform threshold and discussions are continuing in this regard;

• Foreign operators will earn points (proposal to bar from entry into South Africa); and

• No written notices will be allowed – ensuring a clamp on corruption.

Carbon tax looms

The controversial proposed carbon tax – set to bring an extra R82 billion into the coffers of SARS – is another example of the government seeing the ordinary motorist and the trucking industry as an easy source of revenue.

While the RFA supports all endeavours for the reduction of greenhouse gas emissions and climate change, the government’s carbon tax is ill-conceived and highly discriminatory, as the government’s emissions legislation only requires Euro 2 emissions standards, and no ‘clean fuels’ are currently available in South Africa. Furthermore, the carbon tax only applies to new vehicles sold – and not used vehicles.

The introduction of this extremely one-sided carbon tax will further increase the cost of logistics, and cannot be ignored.

More importantly, the National Treasury’s recently published Carbon Tax Discussion Paper focuses purely on revenue-generation mechanisms rather than the reduction of carbon emissions, which is the underlying purpose of such a tax. The taxes collected will not be ring-fenced, and run the risk of being diverted to subsidise other projects not dedicated for the purpose intended.

There are no incentives for transport operators to acquire lower emission Euro 4 and 5 vehicles, nor suitable alternatives such as hybrid vehicles for truckers.

It is quite clear that these tolls and taxes are simply another way of collecting revenue without any consideration for the economic consequences. Yet again, significant increases in operating costs will have to be passed on to South Africa’s luckless consumers.

Article courtesy of the Road Freight Association