It appears highly likely that consumers will pay more for goods in Gauteng stores as a result of the introduction of toll fees on 185 km of the province’s freeways on June 23.

If using an etag, toll fees will amount to 30c/km for motorcycles, 49,5c/km for cars, R1,49/km for trucks between 6 m and 12,5 m long, and R2,97/km for vehicles longer than 12,5 m. Discounts include frequent user price cuts.

Imperial Logistics, which has, for example, a number of large food retailers as its customers, says logistics service providers (LSPs) will be able to pass on the increased transport costs to its clients, depending on the specific contractual terms, as toll fees are statutory costs.

It will then depend on each wholesaler, manufacturer and retailer whether they increase the prices of their goods, says marketing director Abrie de Swardt.

He adds that LSPs themselves will not escape unscathed.

“The cost of toll fee administration will become a business cost, whether only for the LSP, or both the LSP and its customers. To mitigate against this risk factor, Imperial Logistics has invested financially to ensure that it has the ability to administer the toll costs from its side.

“For example, etag administration is needed, as well as the ongoing validation of toll transactions. Administration of toll costs, just as is the case with the administration of diesel, will impact on profitability to an extent.”

“The direct impact on any transport service provider travelling on these routes in Gauteng will be large,” adds Barloworld Logistics transport divisional director Francois van Rensburg.

“The new toll fees could amount to as much as the fuel costs for each vehicle, which is a large proportion of the day-to-day running costs of a fleet. Transport providers which have formed partnerships with clients will most likely be able to contractually pass these costs onto their clients, but the profitability of ad hoc service providers or those without such agreements will be affected negatively.”

He also notes that it is “very likely” that consumers will feel the impact of the toll fees through the rising costs of goods.

However, notes De Swardt, it is not all bad news.

“In a sense, the new levy could force businesses to further optimise supply chain performance and manage the total cost of logistics even tighter. There are numerous tried and tested ways in which to do this, such as through network optimisation and night-time operations.”

The South African National Roads Agency Limited (Sanral), which is implementing the Gauteng toll project, has indicated that there will be discounted toll fees for vehicles travelling at night.

“I think it is important to focus on the positive effect of the investment by government in our road infrastructure,” adds Van Rensburg.

“We fully support infrastructure development and encourage government to continue to maintain all infrastructure in the country so we remain globally competitive and active. Our infrastructure should be seen as a national treasure. It needs to be maintained and upgraded continually.”

He also notes that tolling will force supply chain management and logistics companies to focus on the optimisation of their own or their clients’ distribution networks.

“Smaller suppliers will have to operate more effectively and efficiently to remain competitive.”

ARE BACK ROADS AN OPTION?

“Globally, the standard reaction to the introduction or increase of toll fees is that transporters do move to back roads,” says Van Rensburg.

However, he notes that Barloworld Logistics will not do this as the company has “stringent service levels”, adding that any move to back roads will “probably jeopardise” these standards.

“The challenge of moving back to secondary roads for most transporters will be that of balancing cost versus service to customers.”

De Swardt notes that the predominance of road over rail as a freight carrying mode in South Africa means that both the primary and secondary road networks are already “extensively utilised”.

“When it comes to changing routes from the primary to secondary road network simply due to these toll fees, there are very few cases where our member companies would do this.”