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News24 User

Setting the record straight

by
2009-01-08 12:27

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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Magapane 1/8/2009 12:37:05 PM
This is value adding... You are saluted man. Let's organise a huge stay away from all the major retailers for at least three days.
KOBUS 1/8/2009 12:40:02 PM
Good to know this. You can't really blame the retailers for what they do, as they operate in oligopolistic markets, where prices are notoriously resistant to downward movement. By keeping prices steady and not increasing them, retailers do lower prices in real terms for a while. (Just for the record, I don't work for a retailer and I cringe every time I have to go to the shops, but I know a bit about economics, and what is happening isn't that strange.)
White_African 1/8/2009 12:40:07 PM
Pick n Pay is not "On Our Side". Spar is not currently so "Good for You" These guys who monopolise the industry (including Checkers Hyper, OK, and all the WholeSalers), have been ripping us off for years. They increase prices based on rising transportation costs, but then don't lower them when petrol comes down. Sharks, all of them ...
Stuart 1/8/2009 12:41:29 PM
i cant agree with you more. Although certain major transporters have failed to reduce their transport costs after the recent reduction in the diesel price sighting bad economic conditions and a recovery of costs.
Aiden 1/8/2009 12:58:06 PM
Some retailers forced transport companies to fix their surcharge during the recent fuel price rally. They were all keen to cover their short side forcing LSP's to be left vunerable. They are also the first to now renegotiate rates due to fuel price decreases or opt for variable surcharges.
Raymond Hocknell 1/8/2009 1:10:58 PM
For that Paul. Very interesting. But don't worry, I am sure that most people realise it is the retailers that are screwing us. There was a letter recently where a user was encouraging us to not support PnP etc. Boycotting these establishments is the only power we as consumer have.
Consumer screwed again 1/8/2009 1:10:58 PM
It's a complete rip off from just about everyone. Screw the consumer at all expenses. Take the size of meals for instance. Notice how little you get these days, but the prices also go up.
Willem 1/8/2009 1:16:58 PM
Maybe the major retailers should use more truthful slogans when advertising themselves. Pick and Pay: We are on our side Spar: Good for us Checkers: Better and better... for us
Adam 1/8/2009 1:16:59 PM
I often see on the News 24 Main page, that Wheels 24 has a question and answers page. I also see that there are a lot of questions (and valid ones too -to the likes of me). Can News 24 not set up a forum that we can pose questions to the major retailers, or even just one of them and you get them answered for us. All articles do is state facts as the companies release them, but if you could set up a forumn then we could get them to answer questions that we want answers to.
The Beginner 1/8/2009 1:23:47 PM
Retailers probably do not lower prices so fast due to the effort to be incurred. Competition will ensure that prices are not increased though. It's a pity that the retailers don't participate in this discussion. Thank you Paul Botha!
GG 1/8/2009 1:24:04 PM
Its about time mass strike/boycott of the retailers was organised. All they can do is up there prices and reep big profits. All Crooks!
20 Something yr ol white boy 1/8/2009 1:30:05 PM
The article a few days ago was asking the exact thing. Some retard tried to hijack the thread to turn it into a labour wage dispute. The bottom line is the retailers R greedy and R being made very fat at our expense, they should be hung out to dry & slapped with massive fines. It's robbery what they R doing, how can they put up the price on goods transported at lower costs already on shelf, but when petrol price drops they refuse to drop the prices, that is FRAUD & they must be held accountable.
Give us answers Pick n Pay / Checkers / Spar ETC 1/8/2009 1:35:36 PM
People are well and truely battling out there and we have to put with the retailers crap about everytime there was a petrol price increase they are "forced" to put up their prices due to transporters charging more, but now? Now that the oil price is at an all time low and we are feeling a saving filling up our cars why aren't the retailers dropping their prices accordingly?? WE WANT ANSWERS.
VG 1/8/2009 1:38:08 PM
Thanks for the insight, but remember that retailers' costs are not made up of fuel exclusively - wages, electricity, insurance etc also counts. As you point out, fuel prices are adjusted on the 1st Wed of the month - but do you see retailers chaning their prices on a monthly basis? I don't. It's entirely possible that they use the surplus funds to smooth the rate of price increases.
Steve 1/8/2009 1:42:36 PM
good idea. But there will alsways be some bullshit answer from the retailers. Word of advice, become one.
Martin 1/8/2009 1:42:38 PM
@ All, we are talking about South Africans here, a boycott mass stayaway.....WTF, SAcans can not resist a shopping centre and the shops will always be full off people, the can inflate the price tomorrow of all good by 200%, you will still find people in the shops. We can not satnd together and we will never be able to do so.
Ginger 1/8/2009 1:48:42 PM
Find your nearest cash and carry. Their prices are nowhere near as high as Pick 'N pay and the other greedy shops. You may want to club in with family members or neighbours because let's face it - you don't need 20 tins of beans in one go. But in the long run buying as a group from cash and carries saves you alot of money.
Kevin 1/8/2009 1:57:24 PM
Transporters reduce prices because of compitition and no other reason. Food prices go up because of demand. If you only have 10 items to sell, would you sell them cheap or the 10 highest bidders? Stop kidding yourselves, buying expensive is your own fault!!!
Filemon 1/8/2009 1:59:52 PM
Thanks for the article and insight. Retailers will find another bullshit excuse like exchange rate, commodity prices etc. Ny company absorbed the extra fuel costs and kept our customers. Now the price is down we have benefitted both ways
MJJ 1/8/2009 2:02:42 PM
its all a vicious circle! a retailer would sell a product, but theres 2 costs for him, 1 being a fixed cost and 1 a variable cost. fixed would be his rent for the store, staff salaries (since one cant just hire and fire them anymore) etc. variable the price of petrol, thats how the price gets determined eventually, taking in all these factors. logic tells me now, as said above the consumer would and are still being scewed over. we have been raised to take this BS!i tiff enough!
LizaD 1/8/2009 2:08:00 PM
VG, I don't see retailers changing their prices on a monthly basis. In fact they probably increase their prices 3 to 4 times a month.
Kaas 1/8/2009 2:13:16 PM
Like my wife and I. We saw in November that Checkers suddenly hiked some items and we left our troly half full of stuff to drive 5km to a pick and pay to check out if it was the same there. In our case they had much better prices on the day - and we completed the purchase. BTW Martin - speak for yourself. I love my fellow South Africans. What can I say to make you think like a winner?
Sarel 1/8/2009 2:18:37 PM
When is the Competition Commission going to look into the wheeling?s and dealings of the retail & wholesale food marked?
mafakeng 1/8/2009 2:18:59 PM
Because I am not affording any more things thanks to retailers! They are evil and work in league with the devil. They is a menace to society and all a bunch of blockheads!
caveman 1/8/2009 2:24:39 PM
Burn their shops down! Throw them with boxes of cornflakes! Let's make these suckers pay! I for one will take my two sticks and rub them elsewhere rather than paying an over-inflated price on my matchsticks. Revolution!!!
Mias 1/8/2009 2:25:30 PM
You said it, Martin! South African as a whole have NEVER been able to stand together for an effective boycott, and the retailers know this! What we do very well together is to gripe/whine/moan. And we pray that some "good" retail "Samaritan" hears our crying!
TODD 1/8/2009 2:37:02 PM
I would not agree more. I always buy my cars' oil at Pick 'n Pay, 5 litres, cause i always felt it was much cheaper than buying the 500ml at the filling station. 2 Years ago i was buying the Shell XXX 5Liter for 69.99 to 79.99, now the very same product cost up to 100.00 but the oil price has come down dramatically. Why does it not also go down as the brent crude has?
dave the brave 1/8/2009 2:42:26 PM
hahaha!! I had to laugh when i heard the oke on the news saying taxi fares weren't going to come down because of the cost of services!! Since when are taxi's ever serviced!!!?!?!? Have you seen whats driving on the roads!! And give me a break, taxi servicing counts so litlle!!
LogMan 1/8/2009 2:43:17 PM
If we as transporters can adjust (and it is a major exercise) our Customers fuel surcharge monthly, why does Retailers not declare a fuel component on their goods and do a similar adjustment on this component every month. Gone are the days of price labelling every item and all is about on POS. Easy to change don't you think? If you seriously need assistance, I am sure that between Paul and myself (even as competitors) will gladly assist!!!!
Mias 1/8/2009 2:43:50 PM
You said it, Martin! South African as a whole have NEVER been able to stand together for an effective boycott, and the retailers know this! What we do very well together is to gripe/whine/moan. And we pray that some "good" retail "Samaritan" hears our crying!
Peter 1/8/2009 2:45:11 PM
All the illegals/alliens should be deported from South Africa whether from China, Zimbabwe, US, etc. Why only RSA seem to be the shelter-country for people who are criminals in their own countries. Proper Official documentation has to be produced on request.
Boerseun 1/8/2009 3:36:14 PM
I am all for a boycott. I already support my smaller local suppliers nd produce a lot for myself. RSA has become a "mall" society andnow we are paying the price. High rentals is always followed by high prices, but the retailer do not care, as they have lots feet coming to their door. The day that RSA people learn to band together for a better future, the sky will fall. See during the next election how people still vote for parties with no plan and a bad track record.
Tebogo 1/8/2009 3:38:44 PM
A lot of things have always been rip-offs and we get told about market and economics, starting from houses, food etc. So SA citizens must just live with it, because they have also shown immaturity at best. Stupid race fights on website blogs, the nation is too divided to launch a boycott. Just pay & kak as usual.
Ramp-Agent 1/8/2009 3:49:18 PM
Peter, why did you bring up your little comment, this is about the price of food, not illegals/aliens as you put it. ~sigh~ some people try have a say, and that's all that comes out! i agree, we been taken for a ride with the price of food, these retailers should catch a wake up.

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