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Cargo Carriers calls for a holistic approach to carbon reduction June 13, 2019 |

Premature introduction of carbon tax may impede supply-chain efficiencies

South Africa has implemented a carbon tax to honour its international commitment to reducing green-house gases (GHGs).

While an important and commendable move by government, the premature taxing of businesses that emit carbon from industrial processes and through the combustion of fossil fuels will have a major negative impact on South Africa’s already-embattled economy.

This is despite the continued effort made by many of South Africa’s leading industrial participants to reduce the impact of their operations on the environment.

Cargo Carriers, a leading provider of state-of-the-art transportation solutions to South Africa’s mining, agricultural, chemicals, construction and steel sectors, has established the benchmark in environmentally-sustainable road transport operations.

This is evidenced by the company’s ongoing investment into state-of-the-art information technology to significantly improve the monitoring of and efficient use of fuel, the industry’s single largest input and biggest contributor towards the release of carbon emissions.

Driver training programmes have also ensured the optimal operation of the company’s large fleet of trucks.

These initiatives are complemented by robust fleet maintenance and replacement strategies, with preference given to the procurement of sophisticated truck technologies that incorporate clean engine technologies.

Moreover, the company monitors the use of water and electrical energy to inform measures implemented to further reduce the footprint of its extensive transportation operations.

The carbon tax, which was enshrined into law in May 2019, is the culmination of an eight-year process that commenced with the publication of the carbon tax discussion paper.

This was followed by the carbon tax policy paper in 2013; the carbon offset paper in 2014; the carbon tax bill in 2015; and the draft regulation on carbon offsets a year later.

The first phase of the tax commenced on 1 June and will end on December 2022, and the tax rate is R120 per tonne of carbon dioxide equivalent.

Transport has been classified under the “other” section in the carbon tax policy paper as an industry that also emits GHGs, the lion’s share of which is CO2, followed by small traces of methane (CH4) and nitrous oxide (N2O) that are generated during the combustion of fuels.

It is a concern that this additional cost will increase the already high price of moving goods throughout the country.

Bear in mind that South Africa’s logistics costs have increased as a percentage of transportable gross-domestic product – earned in the primary and secondary sectors of the economy – since 2010 and are already higher than the global average.

The largest contributor is the high price of mainly imported oil, which is an input that cannot be controlled by government and the road-freight industry.

Eco driving; the use of environmentally-classified commercial vehicles, such as Euro 3, 4 and 5 truck engine technologies; deployment of optimised route planning; as well as the continued measurement of carbon emissions; have all played an important role in conserving this finite resource.

However, a more holistic approach that involves all stakeholders, including the public sector, is required to further reduce the carbon footprint of road transport to establish a truly “green” and environmentally-sustainable local freight logistics system.

One of the biggest challenges that require immediate attention is the deteriorating condition of many of the country’s provincial and local road networks, which leads to unnecessary stopping and starting of trucks, as well as the premature replacement of parts and componentry.

This has been exacerbated by highly-congested corridors due to delays in investment into large “brownfields” and “greenfield” road-infrastructure projects to improve the country’s logistics performance.

Long distances between nodes have also contributed towards high logistics costs and the release of large quantities of carbon and particulate matter into the environment.

This is a legacy of the past that used distances to separate communities and can only be addressed by investment into improved spatial planning and infrastructure that supports the development of “smarter” cities.

Due attention must also be given to developing a truly multi-modal freight transport system as part of this plan.

It is also essential that the barriers to the deployment of the latest international truck engine technology in the country be removed.

This requires a sizeable investment by both government and the private sector into the entire diesel fuel value chain, spanning local refineries through to infrastructure and fuelling networks.

Cargo Carriers will continue to invest in environmentally-responsible ways of moving product for leading industrial operators throughout southern Africa and play its part in reducing GHGs to help create a cleaner and sustainable environment.

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