Pictured: Hennie Heymans, MD of DHL Express South Africa

The rising cost of petrol highlights the need for businesses to re-evaluate their logistics costs to prevent the increased costs impacting on the end consumers’ pockets.

Hennie Heymans, MD of DHL Express South Africa, says the increase in the petrol price this week will threaten the sustainability of many local businesses and offers the following advice:

“From a logistics perspective, the new petrol price will result in increased road and delivery costs, and businesses should review and look to streamline delivery processes in order to stabilise costs and keep client tariffs stable.

“Over the past 10 years, the fuel price has, on average, increased 11% per year –far above the official inflation rate, which has hovered around 6%. A strategy for businesses to consider in reducing petrol-related costs could include planning smarter travel routes and shipments because there is now a greater need for a sustainable supply chain.”

Heymans states that in the long run this upward petrol price trajectory could have a negative impact on the logistics industry as firms with a low revenue base or low margins will most likely not be able to compete with other market players who may be in a better position to absorb such cost increases.

“Logistics firms can only absorb so much before factoring in the additional costs and passing it onto their clients who in turn pass it onto their customers. Businesses do, however, need to be diligent and careful when putting these strategies in place as the failure of these systems could have far-reaching negative effects,” concludes Heymans.