The Freight Squeeze: How businesses can keep the wheels turning while their treads are wearing thin.

‍Headline inflation is sitting at 5%. And while food costs have only increased by 1.6%, transport costs have surged by 12.7%. That gap is the defining story of the quarter for many South African businesses and can be the difference between a manageable month and a crippled bottom line.

But this story isn’t one of fuel costs, applicable only to transport companies; petrol prices actually dropped by 52 cents in August. Diesel, however, which our supply chains run on, is up 50.8% from last year, with further price hikes expected in September, according to the Central Energy Fund’s data. So, this is a story about freight, a permanent fixture in the cost of goods, and what it means for the bottom line of South Africa’s business economy.
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So, who feels the pressure most?

‍If you deliver goods:
It’s a double whammy. You pay for transport to get your stock, and you pay again to deliver it. And often, the quotes went out before the costs went up; by the time the revenue is realised, your margins are already squeezed.

If customers come to you:
You’re less impacted, but your customers are feeling the pinch of 12.7% transport inflation (including a sharp rise in taxi fares, up 11.5% in a single month). When household budgets get squeezed, discretionary spending is the first thing to go.
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To keep traction, shift gears

With the repo rate holding at 7.0% as of the 23rd of July, borrowing costs are unlikely to fall any time soon. The instinct then, for many, is to cut back, wait, and weather the storm, but this is typically… counterproductive.

Over a decade of funding South African businesses, the pattern we’ve seen through cost shocks is consistent: the businesses that come out ahead are rarely the ones that cut the hardest. They are the ones that stayed able to act. They bought the stock while the supplier still had it, took the order while the customer was asking, and kept moving: they didn’t break to macro forces; they bent.
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Avoid bumps, corner safely, and arrive alive

Protecting your future margins requires maintaining current ones. If the maths on a product line no longer works at current input costs, the answer is repricing or dropping the line, not financing it. Where funding earns its place is the narrower case: real demand, real orders, and a solid margin whose cash simply arrives later than its costs do. Working capital solutions, like equipment finance or cash advances, are most effective when they bridge the gap between real customer demand and delayed cash arrival, helping you maintain your operational momentum when it matters most.

If you’re feeling the strain but have a strategy to manage it, Merchant Capital’s funding specialists are on hand to discuss your needs and a way to meet them.