South Africa diesel surge threatens fruit export season

SOUTH AFRICA – South Africa’s transport and agricultural supply chains have faced a severe cost shock as wholesale 50ppm diesel has surged past R32.00 (US$1.86) per litre on the coast and R33.20 (US$1.93) inland, according to the Cape Chamber of Commerce and Industry and the Road Freight Association.

The timing is particularly damaging for exporters, with Terry Gale, Chairperson of the Cape Chamber’s Product Business Environment Portfolio Committee, warning that the upcoming agricultural window is under immediate threat.

“As the deciduous fruit season starts within the next two months and the first grape exports begin within weeks, farmers face immense difficulty calculating cost-to-market in an ever-changing landscape,” Gale said.

For exporters, the practical consequence is uncertainty over contract pricing. Transporters must add fuel surcharges, which can add 50% or more to base tariffs and fluctuate monthly, according to Gale.

That volatility makes it difficult for growers to commit to forward supply agreements with European and Middle Eastern buyers, who typically negotiate volumes and delivery windows months ahead.

In addition, RFA CEO Gavin Kelly said that unprecedented costs will force operators to change how they do business rapidly.

“Any transporter will look at fuel consumption, and this could result in various options being considered: different types of vehicles used, different operating hours, different routes, different loading and offloading scheduling, driver behaviour, and a move to battery electric vehicles,” Kelly said.

Meanwhile, the structural problem is the absence of domestic refining capacity. “South Africa currently has no active refineries to absorb these cost increases, leaving us exposed to international supply shocks despite sourcing fuel from non-Middle Eastern markets,” Gale noted.

Kelly warned that geopolitical tensions in the Middle East could push prices higher in November. In addition, Dr Adrian Strydom of the South African Oil & Gas Alliance said that a sharp rise in fuel costs would hit the poorest hardest, through higher food prices and potential job losses.

Cape Chamber CEO John Lawson pointed to the collapse of the national rail network as a root cause. “Because rail is not working, it means we have more trucks on the road than we need to have to transport goods,” Lawson said.

Finally, business stakeholders are pressing the government to implement administrative measures to shield the economy from price shocks while fast-tracking rail and energy infrastructure reforms.

Sign up HERE to receive our email newsletters with the latest news and insights from Africa and around the world, and follow us on our WhatsApp channel for updates.