The Road Freight Association has warned that South Africa’s logistics sector is entering a crisis phase, cautioning that a sharp rise in fuel prices is pushing operators already under strain toward closure and deep job losses.
Association CEO Gavin Kelly says the latest diesel price surge has intensified pressure on an industry that has been steadily absorbing increases over the past three months, leaving many businesses with no financial buffer left.
The association says members are now openly reporting financial distress, with some already shutting down operations.
“In the last month alone, at least 11 members have told us they are closing down,” Kelly said. “There may be more out there that we don’t even know about yet.”
He described the situation as a “battle for survival” for many operators, particularly small and medium-sized freight companies that lack access to large cash reserves or credit facilities.
While some larger firms may have more flexibility, Kelly cautioned that they are not immune either.
“Everyone assumes big companies can just absorb it. That’s not always the case. Margins are being hit across the board.”
The association warns that the ripple effect of closures will extend beyond company balance sheets into employment, with drivers, warehouse staff, and logistics support workers likely to be affected first.
Fuel shock hits already-strained operators
Kelly says the recent increases have not been isolated, but cumulative, and that is where the real damage lies.
“So what we’ve seen over the last couple of months is a continuous escalation,” he explained. “In March, we saw an increase of around 11%, in April about 47%, and in May roughly 20%. That brings you to nearly a 76% to 77% increase in the cost of your daily operation over a very short period.”
For logistics companies where fuel typically accounts for between 33% and 60% of operating costs, the impact is immediate and severe.
“You can imagine what that does to a business,” Kelly said. “If you cannot recover that cost from your customer, the only options are reserves, borrowing, or closure.”
Cost recovery becomes impossible
At the centre of the crisis is a growing gap between rising input costs and the ability of operators to pass those costs on to clients.
The standard response in the sector is to adjust freight rates per ton-kilometre, but Kelly says this is becoming increasingly difficult.
“If your customer can only accept a fraction of the increase, then you are left with a shortfall you simply cannot cover,” he said.
That shortfall is now forcing difficult decisions: reduce operations, restructure debt, or shut down entirely.
Operators have attempted to reduce fuel consumption through route optimisation, better scheduling, and efficiency adjustments. However, industry leaders say these measures are no longer enough to offset the scale of the increases.
“Companies are trying everything they can,” Kelly noted. “Shortening routes, changing schedules, reducing idle time—but there is only so much you can optimise when the price of diesel moves this aggressively.”
He added that even basic operational costs such as tyres, insurance, and vehicle maintenance are now under pressure as companies try to absorb fuel shocks elsewhere in their budgets.
