Dear Road Freight Industry Community,
As we prepare for our third annual Road Freight SME Summit in 2025 underthe theme AGILITY, we reflect on the vital role the road freight sector plays in South Africa’s economy. The industry is responsible for transporting 84% of the country’s goods, contributing approximately 4.5% to South Africa’s GDP in 2023, with that figure expected to hold steady into 2025. It also employsaround 800,000 people, with a significant portion working within small and medium-sized enterprises (SMEs). Despite the challenging environment, SMEs remain the backbone of the sector, demonstrating agility in the face of adversity.
Current Landscape of SMEs in the Road Freight Sector
In the past few years, the road freight sector in South Africa has been heavily impacted by rising fuel prices, inflation, and operational costs. Since 2021, fuel prices have surged by approximately 20%, with petrol prices reaching a high of R24 per litre in mid-2023. In 2024, fuel prices continued to fluctuate, reaching an average of R25 per litre by the end of the year, further placing immense pressure on SMEs. Fuel costs represent a substantial portion of an operator’s overall expenses, and this increase has directly translated into higher transport fees across the board.
Inflation has compounded these pressures, with the Consumer Price Index (CPI) reaching an average of 6.5% in 2023. In 2024, inflation decreased to 6.2%, but the cost of vehicle maintenance, spare parts, and tyres remains high, continuing to put a strain on SMEs. Together, these increases have made it more difficult for SMEs to maintain profitability and remain competitive in a tough economic environment.
The Impact of South Africa’s Economy and Global Trends
Ongoing conflicts in the northern regions of the country have led to disruptions in cross-border transportation, costing South African businesses an estimated R15 Billion in 2023 alone. These disruptions persisted in 2024, with the economic impact from political unrest and security concerns in Mozambique contributing an estimated R16 Billion in losses this year. Road closures, delays at borders, and higher transport costs continue to strain the already fragile supply chains.
The global supply chain continues to be fraught with bottlenecks, especially at South African ports. The Port of Durban, one of the busiest in Africa, faces significant congestion. In 2023, South African port delays cost the economy an estimated R10 Billion, with small operators bearing a disproportionate share of these costs. In 2024, port congestion worsened, contributing an additional R12 Billion in losses to the economy. These disruptions, including delays in the unloading and clearing of goods, have pushed up operational expenses for SMEs, contributing to a 9% increase in average transportation
costs in 2023, with an additional 6% increase recorded in 2024.
Key Cargo Demands and Price Trends
South Africa’s agricultural exports, such as citrus, wine, and maize, are critical drivers for the road freight sector, alongside mineral exports like platinum, coal, and iron ore. The high demand for these goods has kept freight activity busy, but the rising costs of transportation continue to add pressure.
In 2023, transport costs for agricultural products saw a price increase of up to 12% due to rising fuel prices and inflation. For example, a typical delivery of fresh produce from Limpopo to Cape Town saw transport costs increase by R1,500 per load, reducing the profitability of these goods for SMEs involved in their transport. In 2024, these transportation costs have risen by an additional 8%, further straining the financial sustainability of SMEs in the agricultural sector.
Supply Chain Bottlenecks and Infrastructure Challenges
Research has shown that road damage costs South African businesses around R17 billion annually. This figure remained consistent in 2024, with road infrastructure deterioration continuing to challenge the efficiency of the transport sector. Furthermore, inadequate infrastructure at key ports and border posts, combined with political instability in neighboring countries like Mozambique, continues to exacerbate these challenges.
The political instability in Mozambique alone has raised transport costs by 5% for SMEs operating on cross-border routes in 2023, and by an additional 3% in 2024, directly affecting their profitability. The inability to maintain efficient transport corridors and streamline border processes has cost SMEs valuable time and money, reducing their operational capacity.
The Department of Transport’s Roadmap
In response to these challenges, the South African Department of Transport is implementing a strategic roadmap to improve the transport and logistics sector. One key goal of this roadmap is to increase the truck fleet by 15% over the next five years, aiming to boost productivity and efficiency across the sector. In addition, efforts to upgrade road infrastructure and modernize port operations are expected to ease some of the current bottlenecks. These measures are anticipated to mitigate some of the negative effects on SMEs as the economy moves forward into 2025.
Conclusion
We look forward to seeing you at the summit, where we will continue to share valuable insights and strategies to help SMEs thrive despite these challenges. Stay engaged with our ongoing masterclasses, podcasts, and other resources as we work together to build a more robust and sustainable road freight industry.
Yours in collaboration,
Mark Makhubalo, CEO MLM Logistics & Chairperson, Road Freight SME Summit
