The Risks and Vulnerabilities of South Africas Fuel Supply Chain 1000x400

The Risks and Vulnerabilities of South Africa’s Fuel Supply Chain

Fuel Management

Last month’s (July 2021) civil unrest has brought to light many concerns about South Africa’s supply chains. The protests, riots and looting put a halt on most of our food, goods and resource supply for a few days. Connecting each step of the supply chain is the transportation of the products being supplied – and supporting those vital steps is the fuel that drives the transportation industry.

Without reliable and consistent access to fuel, we have no means of transporting the goods and resources that sustain our modern existence. Food shortages, municipal service disruptions and no access to fuel for South African drivers are just the beginning. There is an inevitable risk that arises during civil unrest, especially in our current pandemic reality.

Most national governments and multinational oil companies are aware of the strategic and faciliatory role that liquid fuels play in our modern economy. As such, they have devised a variety of measures to protect the supply of fuel around the world. However, this does not account for interruptions like theft and road closures, which can limit fuel access.

Most of South Africa’s protective measures are leftovers from the Apartheid era and, as expected, do not, adequately, reflect the needs and rights of South Africans. The government has conducted periodic risk assessments and written new policies to try and amend these measures. Although, there is a distinct lack of attention given to the risks imposed by road closures, mass looting and other consequences of civil unrest.

South Africa’s economy is powered by a delicate balance of imported fuels and locally-refined synthetic fuel – mostly from coal. The oil sanctions placed on South Africa during the Apartheid era forced that government to invest in coal-based fuel alternatives. Despite our leadership evolving politically and socially, our economy is still heavily dependent on imported crude oil.

Oil companies have been fighting to re-establish their place in the market, Covid-19 drove crude oil demands to slump as most nations went into lockdowns, limiting transport and travel. This means that the global supply of crude oil will not face shortages any time soon. However, lost revenue, competition from natural gas, the risk of new variants and the need for carbon offsetting pushes the OPEC cartel to further manipulate pricing and supply lines.

Fears that the country would run out of food, goods and fuel during last month’s protests are not unfounded. There is real concern that large-scale looting, road closures and threat of violence can make fuel inaccessible to the transportation industry, as well as ordinary South Africans. These frontline security risks proved to be enough to stop all nationwide freight and prevent oil from reaching our harbours during the unrest and in earlier lockdowns.

It is critical that the South African government, international suppliers and local refineries have contingency plans for when our fuel supply is under threat again. The empty shelves and closed motorways between the economic hubs of Gauteng and Kwa-Zulu Natal were a stark warning of what worse circumstances could occur in a more severe disturbance.

It was made clear that the biggest threats to South Africa’s fuel supply come from within the country. Protesters, rioters, looters, insurrectionists, racketeers and political aggressors, at various stages, helped to close down highways, shut down ports, hinder trade and threaten a state of emergency. These are all critical stages in our fuel supply chain and pose a terrible risk.

Kwa-Zulu Natal is home to two of Africa’s largest ports in Richard’s Bay and Durban, while Gauteng is at the forefront of (South) Africa’s growing economy. The ability to deliver fuel via Durban’s port was compromised and the ensuing unrest led to the temporary closure of the N3. Without transport trucks and fuel tankers on the road, consumers were left without access to many critical goods and resources we need to survive.

Fuel supplies and fuel supply are two different concerns. Fuel supplies are the crude oil and refined oil that we already have available in the country. Fuel supply is the access South African buyers have to oil reserves overseas. If our ports, refineries, roads or garages are closed down or inaccessible for any reason – and for any extended period of time – it could leave us in a much worse position than last month or any time during the pandemic.

Fortunately, our fuel supplies managed to hold up. Although, we must continue to ask hypothetical questions about what could have been, in order to better prepare ourselves for future vulnerabilities and risks to South Africa’s fuel supply chain. Our government, refineries, transporters, importers and distributors need to work together to assess, understand and mitigate potential risks posed by future fuel supply chain disruptions.

If you’re looking for the latest in fleet management solutions or are wanting to integrate a fuel management system into your larger fleet operations, speak to one of our expert consultants at Landmark Tracking.

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