How do fuel prices affect the courier industry?

If any of you have visited the petrol pumps recently, you will have seen the significant rise in both petrol and diesel prices from 12 months ago. The pick up in activity after the pandemic, along with supply and demand issues is pushing up the price of fuel more and more, and there doesn’t seem to be much let up in it either. In this article, as same day couriers, we’ll consider how fuel prices affect the courier industry and perhaps ultimately, impact the customer.

Fuel prices are critical to any business or industry. Those that are impacted the most though, are ones which involve travel and journeys. It is no surprise therefore that a courier company who has a fleet of vans on the road everyday travelling from A to B are amongst some of the most likely to be affected. Petrol and Diesel is definitely the ‘blood’ of any courier company.

Most courier companies can stomach a rise in fuel price. The problem comes when that rise is sustained for a long period. This then starts to impact on profit margins and can make offering competitive services difficult for customers. The problem with rising fuel costs is that it is not a localised or individual company factor. If fuel prices rise, all courier companies are affected and likely to be in the same boat, so shopping around for better rates for example isn’t something which is likely to work.

The irony is that more and more people are demanding free and rapid delivery services for their items – especially when using shopping sites or companies. Unfortunately, these items can’t arrive by floating on the wind, and this is totally at odds with fuel prices. There may be free shipping, but there is definitely not free fuel, and the charge has to be absorbed somewhere. Most companies have a degree of scope to be able to absorb fuel price rises. No one likes price rises and it is not attractive for new business, so many will hold off passing on costs to customers. There comes a time however when this can’t be done indefinitely, and it goes back to that idea of price rises for a sustained and long period being the problem

What can couriers do to help themselves and avoid passing on large rises to customers?

  • Lobbying is one idea. Over two-thirds of petrol and diesel price is nothing to do with it’s cost, but fuel duty and VAT in the form of taxes. If businesses all challenge governments in the difficult times, they have to listen?
  • Petrol and Diesel vehicles will stop being made in the near future. We are now in an era of hybrid or fully electric alternatives. Sometimes the price of these alternatives can be the biggest obstacle, but there is nothing wrong with exploring options and seeing what is viable. Cost will have to come down at some point as petrol and diesel will be a thing of the past, so it is only perhaps a matter of time?
  • Many couriers can look at their fleet and consider its effectiveness. Are lots of large vans needed, where downgrading size with smaller engine capacities could be an alternative for example, thus saving fuel costs?
  • Employees and drivers should be made known the importance of ‘respectful’ driving. We are not talking about other road users here, but the actual vehicles. It is widely known that driving practices such as late braking and harsh accelerating increase fuel consumption. Perhaps not by a lot on an individual journey, but multiply that across all journeys per day and all vans or vehicles in the fleet, then that cost will soon mount up.

Viable and functional businesses are the key to the economy recovering after the pandemic. Let’s hope that fuel prices do not hamper this!

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