IMPACT OF RISING FUEL PRICE ON COURIER INDUSTRY

Post COVID fuel prices have taken an extraordinary hike accompanied by an inability to match supply with demand further pushing up the price of fuel leaving a negative impact on many businesses as fuel is critical to every sector. However, the ones that seem to be affected the most are the ones whose business model revolves around travel or transportation making it no surprise that courier companies became one the most affected by the inflated price of fuel.

Perhaps some courier companies may have been able to withhold the rise in fuel price, but not all, especially those who are financially less resilient or newbies. However, in the long run, prolonged inflation inevitably starts affecting the profit margins coercing the companies to transfer the burden to the customers.

But why do fuel prices fluctuate?

Fluctuations in fuel prices are more common than one might think. These ups and downs arise for a number of reasons;

  • When the world price of crude oil changes or is affected for any reason
  • Changes in the International exchange rate affect the price of oil in every country
  • Uneven supply and demand of fuel around the globe brings changes to the fuel prices overall
  • Natural disasters, war, and political unrest/instability is yet another reason for unstable fuel price

Here is a quick review of what happens when oil prices rise and fall:

When oil prices rise, the courier service providers either face losses or raise prices for their services to avoid profit reduction. This works on the outward domino effect principle such that if the service provider is charged more for their transportation of freights, the customers will have to pay more to make up for the additional transportation and fuel costs bored by the shipper.

When oil prices fall, the courier companies fall under a reverse situation where their savings from reduced fuel costs is passed on to the customers in the form of lower prices, profits see a boost and the company moves towards positive growth overall.

The rise in fuel prices has forced delivery companies either out of business or overburden their customers with price jumps. Major companies like Amazon, FedEx, DHL, and UPS are left in chaos and confusion to find ways to overcome the challenge of bearing the increasing fuel cost. We have been able to come up with ways courier companies can avoid passing on the price burden to customers;

  1. Lobbying; the actual cost of petrol and diesel is nothing compared to the fuel duty and VAT in form of taxes that comprise over 2/3rd of the total fuel price. If gathered together to raise a single voice the courier companies can challenge the government to reduce taxes for courier companies
  2. Living in the era of technology, petrol, and diesel-operated vehicles are gradually getting replaced with hybrid or electric/automated vehicles which may seem to be quite expensive options but on the other hand, can be a smart investment for business depending on travel/transportation. Also, since many people will have switched to the electric alternative the price of petrol and diesel will eventually have to come down, so the current price hike can be assumed as a temporary rise.
  3. Another viable way to cut down on cost is to analyze the effectiveness of the large vehicle you are using for your business and replace it with a smaller engine vehicle if the nature of your business is unaffected by the downsizing.
  4. Train drivers/employees to drive smoothly since late braking and harsh accelerating are most likely to increase fuel consumption. This may not seem a lot for an individual journey but considering multiple journeys throughout the day mount up to a significant waste of fuel per day.

QicGo, regardless of where the fuel prices may lean, has always committed to its customers. Taking pride in saving its customers’ time and money, regardless of the increased cost of fuel, with our dedicated, honest, and reliable service the customers can always rely on QicGo.

From a small retail business that requires transporting its products from one point to another, or a pharmaceutical service highly dependent on timely deliveries, QicGo courier always has your back covered when it comes to safe and prompt deliveries. It is our focal point to ensure your business runs smoothly and thrives even during difficult times, such as the recent pandemic. We drive for you, so you don’t have to!

You can further inquire about our wide variety of courier services including same-day delivery, and scheduled delivery. Contact us now at 033 0133 3033 or go to https://qicgo.co.uk/schedule-next-day-delivery/. Our serving areas include all UK Airports.

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