Another petrol hike: Businesses need to re-evaluate logistics costs in order to ensure sustainability

Another petrol hike: Businesses need to re-evaluate logistics costs in order to ensure sustainability

The price of petrol in South Africa has once again increased by 36 cents today (Wednesday, 5 March 2014) following a 39 cents increase in both January and February, and a 17 cent increase in December 2013.

According to Hennie Heymans, MD for DHL Express South Africa, this steady rise in the price of petrol can have a significant impact on local businesses and therefore highlights the need for businesses to re-evaluate logistics costs in order to ensure sustainability.

He says that the rising petrol price will result in increased road and delivery costs and affect local businesses who operate in the logistics sector, or those who transport their goods either locally or abroad.

“Businesses need to re-evaluate logistics and look to streamline delivery processes in order to stabilise costs and keep client tariffs stable, as opposed to driving up costs for their customers.”

Hennie says a strategy for businesses to consider for reducing petrol-related costs could include planning smarter travel routes and shipments.

“Due to the high costs of transport there is now a greater need for a sustainable supply chain. Making use of intelligent route mapping and planning, as well as cutting back on routes where warranted, can all assist absorbing some of these increases and make a significant difference to a business’ profitability.”

The SABC has reported that Richard Downing, SA Chamber of Commerce and Industry Economist, said that South Africans are currently living beyond their means and that the petrol hike will impact negatively on price increases.

“Consumers will have to be very careful of how they apply their money. Although consumers will receive their salary increases in the beginning of the year, it will not last the whole year and prices will keep on increasing throughout the year,” Downing said.

According to the SABC, the Automobile Association has warned that if the rand continues to depreciate, a petrol price of R16 per litre is possible in the medium-term. The association says the rand fell from R10.35 to R11.20 against the dollar between late December and late last month.

Apart from the increasing petrol price, businesses also need to brace themselves for an increase in the general fuel levy from 2nd April 2014.

By: Kristy Jooste

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