The Value of EPK in the Road Transport Sector

Earnings Per Kilometre (EPK) is a critical but often overlooked profitability metric in the road transport industry. In this article, Absa’s BANIE CLAASEN unpacks how operators can use EPK to optimise fleet performance and navigate the twin pressures of rising costs and thinning margins.

South Africa is blessed with an expansive 750,000-km road network, the largest in Africa and the 10^th largest in the world. Naturally, road dominates freight movement with an 80% market share, making it the biggest subsector in transport.

Road transport operators managing fleets of all sizes – from interlink trucks and tautliners to flatbeds, refrigerated units (reefers), bulk tankers, car carriers and other specialised vehicles – are the animating force of this economy. They haul everything from the food we eat, the clothes we wear and the furniture in our homes to the cars we drive, the tech gadgets we use and the minerals we export.

The industry has, however, experienced its share of ups and downs. According to the C-Track Transport and Freight Index (TFI), the sector’s 2.4% growth in the first quarter of 2025 slowed to 0.8% in the second, in line with GDP. 

To make it in the tough road freight industry, where internal and external factors compress margins, operators need smart fleet management strategies. By showing how much revenue a vehicle generates per kilometre travelled, EPK helps operators to assess whether or not their pricing strategies, fleet utilisation and cost management align with sustainable profitability. 

Revenue and cost pressures

The going rate per kilometre varies depending on the route, the type of commodity and various other factors. So, what are the revenue-side and cost-side pressures that eat into this thin EPK margin for operators?

On the revenue side, intense competition in road freight and logistics keeps rates under pressure. Road freight hauling is an intensely competitive open market; operators who overprice are quickly replaced by cheaper competitors, while under-pricing hurts profitability and is unsustainable in the long run. Meanwhile, over-capacity in certain corridors – most notably the container corridor between Johannesburg and Durban – is pushing prices down.

Macroeconomic factors such as the slowdown in economic growth and lower consumer demand also add to revenue pressure and thinning of margins. Volatility in global trade, for example, has negatively affected domestic transport and logistics. Take the reciprocal tariffs by the Trump administration on key SA imports, which have had a knock-on effect on our automotive sectors. Vehicle exports to the US have fallen by 50% since the tariffs came into effect; transporters in the automotive export value chain, as well as parts of manufacturing, have experienced the hardest impact.

On the cost side, fuel remains the most immediate saboteur of EPK, accounting for up to 55% of operational costs and driving up cost per kilometre (CPK). An increase in the cost of vehicle parts, maintenance and repair charges, wages, insurance premiums, tolls and road charges, as well as the financing costs of fleet acquisition or expansion, all have a negative net impact on CPK as well. The recovery of the rand against the US dollar has, at least, pushed the diesel price slightly down, to the benefit of transporters. 

The right partner makes all the difference

In this intensely competitive and volatile industry, it is critical that transport operators select tailor-made financial solutions. The right partner can assist operators in crafting fleet optimisation strategies and offer transactional tools that help ease operational cost pressures, actively managing the total cost of ownership (TCO) and ensuring a future-fit replacement strategy.

For transporters looking to expand or modernise their fleets, long-term lending packages at reasonable interest rates assist in the sustainable management of costs. Automated fleet management systems and fuel efficiency measures encompassing telematics, route optimisation and driver training can also result in significant operational cost savings by reducing fuel burn. This has also led to higher demand for full maintenance lease solutions, whereby the fleet operator prefers a risk prevention strategy and focus on fleet efficiencies rather than ownership.

Of course, operators may choose to go it alone, but those looking to maximise efficiencies will understand the added value of finding the right partner. A partner that understands the sector’s needs can offer strategic advice when it comes to contract renegotiation – for example, linking tariffs to fuel indices or Consumer Price Index (CPI) to hedge against cost increases.

Road freight haulage will continue to be a crucial economic driver in South Africa for the foreseeable future. Those seeking to make it in this industry must understand the dynamics that make it a profitable and sustainable venture in the long run.