LETTER: Fuel price hikes are hitting companies’ cash flow

After visiting some carriers that are dealing with shifting circumstances in their businesses due to increased fuel expenses, memories of dreary to apprehensive facial expressions come to mind. According to a long-haul fleet owner, fuel will now account for 68% of operational costs because of the latest diesel price rise. "This will kill us."

The average diesel tank of a large truck holds 800l, and for every 50c/l increase in the price of diesel an additional R160,000 is required to settle the monthly fuel bill, according to an 80-strong truck fleet owner. Each month this fleet consumes about 325,000l of diesel.

This has a significant influence on the company’s cash flow given that its clients only pay it after 60 days. As a result, it had to ask its fuel supplier for an additional R5m credit limit on its gasoline account. Many transportation companies will be forced to do the same, but many will be denied greater credit limits by their fuel suppliers. As a result, they will have to pay the additional costs out of their own pockets, putting a burden on cash flow.

This problem isn’t just harming trucking companies; it’s also affecting tour bus operators, aviation and maritime companies. Not just large corporations, but also small enterprises such as school transportation, bus, shuttle and taxi businesses, courier services and car rentals.

As the price of gasoline rises more transportation companies will be forced to close or cut back on other vital costs such as vehicle maintenance to stay afloat and keep the wheels moving. This, in turn, will have a negative effect on road safety, as a lack of maintenance will result in an increase in the number of unroadworthy vehicles on the road.

Regardless of how you look at it, the increase in fuel prices is a death sentence for some businesses, consumers and even general road users. During Wednesday’s debate in parliament the DA will amplify the circumstances imposed by the ANC, sharing the killer blows of a heartless national government.

Chris Hunsinger, MP, DA shadow transport minister

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