Inflation and its Effect on Transport Costs in South Africa

The Impact on Larger Commercial Vehicles

The same study indicated that in the year 2020, distances travelled by panel vans were down from 2 350km to 750km, trucks were down from 3 100km to 1 100km, while distances driven by bakkies decreased from 2 200km to 700km. This enabled many commercial operators to save a bit of cash, but for some, less time on the road meant fewer deliveries made.

Fast-forward almost two years later and it’s business as usual. Except this time, high inflation and high-interest rates are negatively impacting transport costs for businesses of all sizes. Data gathered by the Central Energy Fund suggests that we’re likely to experience another fuel hike in July. Petrol 95 and 93 are expected to increase by 203 cents and 186 cents respectively, while Diesel 0.05% and 0.005% will both increase by 128 cents.

How are corporates to manage these increases so as not to jeopardise business operations? By outsourcing their logistics to a third-party provider that can better manage their deliveries.

Businesses that handle physical products spend a large amount of money on getting items delivered, especially when catering to new customers who expect faster delivery times. While transport fees are a major contributor, so are insurance and maintenance costs, and labour management. Companies like Loadit, therefore, reduce the risks associated with having your own delivery vehicles and drivers.

Mitigating Costly Business Components

Labour is a costly business expense when you take salaries, training, insurance, and disputes into consideration. Loadit trains and manages drivers that are micro-enterprises themselves with the ambition to one day grow their own fleet. Each is equipped with a mobile device to ensure they’re always reachable while Satellite Navigation systems enable route optimisation and minimise their chances of getting lost.

Another pricey component of transportation for any business is fleet insurance. Whether bakkie insurance for small businesses to vans and trucks for bigger corporations – insurance is necessary to mitigate any threats or risks. Logistics outsourcing eliminates the need for such since providers like Loadit have that covered. The same applies to legal and regulatory requirements of owning a vehicle. Third-party providers will fulfil any legal responsibilities so that business owners don’t have to.

Reducing transportation costs is then, arguably, the biggest appeal of logistics outsourcing. These savings come as a result of better utilisation and control of the transport assets and processes. The savings that Loadit brings, come from the ability to dilute fixed costs (capital, licensing, insurance, depot, and management, to name a few) through better vehicle utilisation, and from choosing the correct vehicle size depending on the items so as not to waste capacity.

Instead of compromising their deliveries, businesses can, in turn, handle the relentless rise in the fuel price, while simplifying their supply chain. Loadit collects products from the facility and delivers them to other businesses or the final customer. The same applies to any goods that need transporting to and from warehouses.

Variable Costs and Automatic Discounts

The catch? There is none. The right provider will offer rates that are fully variable per job. Business owners can enjoy Loadit’s service, for example, without making a long-term commitment. What’s more, corporate customers are given special rates and personalised payment terms saving them even more at the end of the day.

So, is it possible for small businesses and/or large corporations to manage inflation? It appears so. When it comes to transport costs, at least. By outsourcing logistics, businesses will be better positioned to transform some of their biggest expenses into variable costs. Thus, leaving them the time and funds to focus on growing and improving their operations.