Whilst the Road Freight Association (RFA) welcomes the reduction in tariffs we still believe that the E-Toll tariffs are still too expensive. For truck operators to stay in business every attempt will have to be made to pass on these costs to customers and ultimately consumers.

Even after the proposed reduction a Class C vehicle operating on the Gauteng Freeway Improvement Project (GFIP) network for 70 km per day (single trip) at R2.00 per km for at least 3 trips a day will result in an increase in cost of 11%. Even if the additional lanes alleviate congestion to the extent that an additional trip could be made, the operator would need to generate a profit of R1.20 per km. With the proposed toll of R2.00 per km an additional trip would not be feasible.

Local delivery vehicles travel more frequently per day on the GFIP network. A medium sized vehicle (Class B) traveling 16km per day (single trip) along approximately 6km on the GFIP network can do about 6 trips a day. The tariff of R1.00 per km will result in an 11% increase in cost.

A container operator picking up containers at City Deep and delivering to an address in the Kya-Sands area will travel approximately 73km (including the return leg) on the GFIP network. These operators are typically SMME operators and earn total revenue (turnover) of only R1 800 per pickup. With the profit margin being as low as 2% (R0.75 per km) and with the proposed toll fee of R2.00 per km - this will lead to the death of already struggling small business which will eradicate the SMME market.

Small business can often not leverage the bargaining power of large operators - and if they are unable to transfer these costs the resultant effect will be the closure and the eradication of small (and especially BEE) operators. The freight industry has been widely criticised for its lack of transformation but large cash outlays and cash flow constraints have been major barriers to entry for small business and the proposed toll fees will further exacerbate this problem.

The Courier industry will be hugely affected by the rollout of E-Tolling. On average a courier vehicle (bakkie) from Isando to areas in and around Johannesburg will travel for 150km a day on the E-Toll network. Average toll costs will amount to R60 per day which is equivalent to a 17% increase in costs. For an operator with a fleet of 100 bakkies this would cost approximately R100 000 per month which is a huge cash outlay for any business. It should also be noted that many of the large courier companies outsource their business to owner drivers - a major avenue for BEE empowerment. As owner drivers usually have high cost structures due to their inability to cross subsidise as they usually have only one vehicle, this is a major threat to owner driver schemes.

A furniture removal operator charged on a volumetric basis rather than per axle is being severely compromised as these trucks are not loaded to the 56 ton GVM as most other trucks of this size would be. They are not likely to be more than 25 - 30 tons GVM. On average these removal operators would be expected to pay R75 000 per month which would have to be transferred to home owners that want to move house.

It is a misnomer that the savings in maintenance cost as a result of the GFIP roads will outweigh the costs of the tolls. Not all the routes traveled by the trucks are well maintained, which results in high maintenance costs once off the toll network. Any savings gained from the GFIP will merely offset some of these costs. The idea of one good road amongst many bad roads cannot alone bring a major change to the maintenance costs of trucks. Congestion will in all likelihood increase on other roads as people and firms may not be willing or able to pay for the GFIP.

The Association is of the opinion that a further reduction is possible if Government were to finance R1 billion of the SANRAL costs for each of the following two years, after which the financing would reduce to R500 million for two years and the toll fees could be increased again. In this period the Gauteng Department of Transport & Public Works could increase spending on public transport, as well as road infrastructure - so that after four years there would be suitable alternative routes and an efficient public transport network.

The Gauteng Province will spend R469 million on roads in the 2011/12 financial cycle whilst KwaZulu-Natal will spend R1.98 billion on roads over the same period. There must be a very good explanation as to why the busiest province with the most vehicles spends less than a quarter of the budget allocated by a poorer province on road infrastructure. This lopsided spending causes high vehicle maintenance costs in the economic heartland of the country. This requires better prioritisation of spending in many provinces in the country.

A ring-fenced fuel levy should also be considered for national and provincial roads and perhaps even main metropolitan roads to ensure that there are dedicated funds available for the road network.

The new tolls will now force trucks onto the already fast collapsing road network, and with the trucks being the major revenue generator in the GFIP model this will surely render havoc with the assumptions in the model.

The freight industry underwent a 9 day strike earlier this year, and also had to bear the consequences of the recent steel and fuel industry strike that inhibited movement of trucks - this has cost the industry millions of rands in lost revenue.

Gauteng operators have also had to bear the cost of the increase in licence fees of 34% and cross-border operators have had to bear increases in permit fees of up to 1000% of which service delivery is still questionable.

The overall cost of business has increased substantially this year - from escalations in electricity, municipal rates and taxes, fuel taxes, employment costs and the forthcoming fuel price, the proposed carbon tax, tyre disposal levies and the reconfiguration of fleets carrying high cube containers. These will place further strain on severely strained resources. Many - mainly SMMEs - will not be able to absorb these costs and neither will they be able to pass them on to clients and in all likelihood the GFIP tolls will most probably result in the death of these small operators.

Should business not be in a position to afford these toll tariffs due to the serious cash constraints, truck operators will have no choice but to start looking at retrenchment strategies, downsizing of operations and ultimately closure. Although the RFA has cautioned both the Minister of Finance and the Minister of Transport of the devastating consequences that the tariffs will have on operators, this seems to have gone unnoticed!