Dear Editor,
As an employee at a major transport company in South Africa, I feel compelled to set the record straight, referring to transport companies not lowering their rates after a diesel price cut.
I have been in this industry for the best of 15 years, and have worked with all major transport companies, and one thing that is enforced very rigidly, is the fuel component.
At midnight on the first Wednesday of every month, the rates always drop or rise, according to the percentage drop or rise in the diesel prise.
We all know that the price of diesel is not regulated in the normal pump price, but only in the wholesale market.
All transporters buy diesel wholesale, so the normal pump price only affects them on minor roadside fill-ups. We do not wait for the cost of maintenance to come down, (taxi bosses, are you listening?) or the inflation rate to stabilise.
The exact formula that we use to adjust the rates, rely on the fuel component. This is agreed on during the quotation, and this determines the percentage of the rate being taken up by the fuel expenditure.
This is usually between 33% and 45%. This part of the transport rate will then drop or rise according to the percentage rise or drop in the wholesale price.
Retailers up their prices immediately after a price hike, although the goods on the shelves were transported at the old price, yet after a price drop, they are reluctant to drop their prices, because of the fact that the goods were placed on the shelves at the higher price.
You can certainly not try to make profit on both sides?
Garage owners must sell expensive fuel for cheaper after a price drop, but cash in by selling cheap fuel for higher after a price hike.
Why are retailers allowed to abuse this practice at our expense?
Paul Botha
Boksburg
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