The impending introduction of e-tolling in Gauteng, in 10 days' time, is set to add to the pressure already faced by the channel, and is one of many input price pushes that will see PC prices go up.
The channel is already battling higher fuel costs, component shortages and a fluctuating rand to dollar exchange rate. Now, the channel has to grapple with e-tolling costs, which will push up the price of transporting PC components in Gauteng.
E-tolling is set to come into effect on 30 April, although it is still the subject of pending legal action.
Motorists with e-tags will pay 30c/km, while motorcyclists will pay 20c, non-articulated trucks will pay 75c, and articulated trucks R1.51. There is a frequent user cap of R550 a month for light vehicles and motorcycles with tags, while heavy-vehicles will benefit from a time-of-day saving of 20%.
Economic hub
Comztek consumer director, Heinz Stephan, says the company's average delivery price will be pushed up by between 10% and 20%, which will ultimately be passed onto the consumer, making goods more expensive.
There is not much room for the channel to absorb the effect of e-tolling, which will be substantial, he notes.
The controversial tolls will affect about 60% to 70% of all distribution business as many companies are based in Gauteng, and about 80% of all goods travel through the province as distribution hubs are mostly located in Gauteng, he says.
Stephan says the tolls could lead to creative solutions, such as the use of back roads. This creates other problems, such as the risk of hijacking and congestion, which could delay delivery times, he adds.
More price pressure
AxizWorkgroup chief marketing officer, Craig Brunsden, says a combination of e-tolling and petrol price could push prices up by between 2.5% and 5%. He says the rising oil price, which is currently around $120 a barrel, will affect shipping prices if it rises any higher.
Impending e-tolling is one of a few of “very serious” inflationary pressures the sector is facing, and the company will have to pass hikes on, says Brunsden. Collectively, price pressures are more than the company's margins, he adds.
Brunsden says it is difficult to estimate the impact of the e-tolls as most of the company's service partners, such as couriers, do not have a “formal plan”. He says it is “wait and see” at the moment.
“It has been hard to plan for scenarios that keep changing, but we do expect the e-tolling costs to be another inflationary cost that will impact prices.”
However, Brunsden says e-tolling will have a less severe effect than the rand exchange rate, which normally translates into immediate price fluctuations. Price increases could, however, move outside of the 2.5% to 5% range if the rand weakens, he notes.
The sector is already seeing the impact of people sweating assets for longer, virtualisation technologies reducing the need for powerful hardware on the desktop, and tablets creating a new category that allows users to buy down in certain cases.
“The boom times are a thing of the past and users are more educated and selective in making decisions based on their needs rather than latest tech,” says Brunsden. However, while growth is modest, market fundamentals are still in place, he adds.
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