The implication of the tariff hike will have a material impact on the vast network of taxis, trucks and buses’ input costs across the country.
By Ruan Jooste
The rubber is on the tarmac as companies importing tyres into South Africa yesterday were up in arms against an application by the SA Tyre Manufacturers Conference (Satmc) to tax authorities to impose an anti-dumping duty on Chinese imports.
The implication of the tariff hike would have a material impact on the vast network of taxis, trucks and buses’ input costs across the country.
The SA Tyre Manufacturers Conference (Satmc), which includes the brands of Continental, Bridgestone, Goodyear and Sumitomo (the makers of Dunlop tyres), recently applied to the International Trade Administration Commission (Itac) to impose additional duties of between 8 and 69 percent on the rubber rims of passenger, taxi, bus and truck vehicles that are produced in China.
However, in opposition is the Tyre Importers Association of South Africa (Tiasa), the National Taxi Alliance (NTA) and the Road Freight Association (RFA), who said yesterday in a joint media briefing that the taxi industry would be hit hardest, with mini-bus tyre prices increasing by 41 percent while truck and bus tyres would go up by 17 percent.
Tyres are the third biggest cost driver in the transport and logistics industries after labour and fuel, according to Tiasa.
By the time of going to deadline, Satmc, had failed to respond to Business Report queries.
According to customs data tyres worth R5.7 billion were imported into South Africa in the investigation period under review (August 2020 to July 2021).
Charl de Villiers, the chairperson of Tiasa said the application seemed absurd, saying that almost 3 200 tyre products were sold in the country, while the applicants, according to their own price lists, collectively imported 80 percent of the variety of tyres that they sold.
De Villiers said, if the application was successful, the duties would add a significant cost burden to taxi and bus operators and trucking and logistics companies.
De Villiers says, South African motorists and those operating in the mass transport sectors could ill-afford any interventions which might further drive up road freight or transport costs, which are key drivers of inflation, with petrol prices ranking at historical high levels.
This year alone, South Africans have faced a 20 percent increase on petrol.
Donald MacKay, the founder and CEO of XA International Trade Advisors agreed with De Villiers, saying that the four companies in question were also the same companies that were under scrutiny at the Competition Commission.
Satmc members have been in the news recently due to a price-fixing investigation, with the Commission finding that the companies had a collusive relationship from 1999 until at least 2007.
While Bridgestone applied and was granted leniency, and Dunlop had settled in the matter, Goodyear and Continental still faced the wrath of the Competition Tribunal.
MacKay said: “Futhermore, these companies are also importers from China, and as Continental and Goodyear import 100 percent of their bus and truck tyres, they would essentially be asking for duties against themselves.”
The problem, according to MacKay, is that if new duties are imposed against the Chinese, imports will, first, shift to other possibly more expensive markets like the EU, increasing local prices, and, “second, domestic producers and retailers will raise local prices to meet those imported cost”.
MacKay added that everything transported by road would become more expensive, whether it was chicken, or bread, or clothing.
Spokesperson for the National Taxi Alliance, Theo Malele, who was also part of the media panel at the briefing, said the government needed to look at every way possible to arrest the surging cost of transport.
“We already estimate that taxi fares need to rise by up to 30 percent due to rampant petrol price increases,” he said.
Meanwhile, Gavin Kelly, the CEO of the RFA said, based on the proposed increases, the organisation estimated it would translate into a 6 percent increase to operating costs for logistics operators.
Kelly told Business Report that it remained unclear why the application was being made.
“No information has been made available in the matter," he said.
He said: “Transport companies already cannot afford the ever-rising operating and fuel costs, and so an increase in the cost of tyres could become the final nail in the coffin for many operators, leading to a collapse in the country’s critical road freight logistics sector.”
Tyres are a huge cost factor for road transporters in South Africa, and any increase in costs upstream will ultimately filter down to consumers, as most operators will be unable to absorb the full cost increases.
Lwazi Khoza, a spokesperson for the Department of Transport, told Business Report that “they have read the requests and forwarded them to the minister’s adviser for comment regarding the safety concerns”.
BUSINESS REPORT