How much did the increase in petrol, diesel prices affect the logistics industry?

As India recovers from the deadly second wave of the COVID-19 pandemic, the country faces several challenges to deal with it. The pandemic disrupted the lives of people around the world and several lockdowns and containment measures made things worse for the country.

Inflation increased which eventually led to skyrocketing of prices of essential commodities such as cooking oil, LPG, petrol and diesel. The recent hike in fuel prices in India has been a primary concern for all sectors.

The rise in fuel prices has affected not only household income but also the logistics sector along with balance sheets of companies.

Though the prices have started declining, but the price of petrol in metros is still above Rs 100. As on September 5, the fuel prices across the country were Mumbai (Petrol: Rs 107.26, Diesel Rs 96.19), Delhi (Petrol Rs 101.19, Diesel Rs 88.62), Chennai (Petrol Rs 98.96, Diesel Rs 93.96), Kolkata (Petrol Rs 101.62). ) Are included. , diesel Rs 91.71).

Harsh Vaidya, Founder and CEO, WearIQ, says, “While most logistics companies were willing to defray the increased cost while the prices went up by 5-10%, now with the increase in price, there is no need to negotiate with courier partners. The need arose. However, with the Diwali sales season approaching, we are trying not to pass on the costs to our e-commerce sellers, as they may have already planned their sales. After that, if the trend continues, we will have to look at the revised costs.

Vaidya is of the view that concerns arise when it comes to the sales season as with the increasing buying pattern of consumers, there is a shortfall in both mid- and last-mile deliveries, when all the giants are focusing on time-efficient deliveries. There are. “We expect the authorities to consider taking efficient measures that can help contain fuel price inflation – which will help maintain profitable margins for the logistics and e-commerce sectors alike,” he added.

Meanwhile, Candace co-founder and CEO Sandeep Aggarwal said, “There has always been a direct impact on the profit margins of the e-commerce company due to rise in fuel prices.”

According to economists, a ten percent increase in fuel duty leads to a two percent increase in the cost of delivery of goods. Freight charges calculated on a distance basis are affected by the continuous increase in fuel prices. Already stressed by the pandemic, the logistics sector is going through a tough time. With every increase in fuel prices, they are bound to increase their cost of carriage. The e-commerce logistics ecosystem has to be tuned accordingly and this directly affects the margin earned by the e-commerce companies.

He further added, “With the upward trend of consumer online buying behavior, the margins of the e-commerce giants should increase manifold, but imbalances in the logistics ecosystem are having a negative impact on the trend and are causing an ever-increasing curve. leveling up,” he continued.

The fast approaching festive season requires quick reforms in the e-commerce logistics ecosystem so that they can earn their fair margins. Global trends have a great impact but reduction in heavy taxes can certainly ease the burden of declining profits on both the logistics and e-commerce sectors.

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