Fuel price rise in India to be passed to customers
Petrol and diesel prices were raised by the Indian government’s Ministry of Petroleum last week, a move that will very likely impact the cost of moving cargo in the country.
Fuel prices are highly regulated by the government to keep downward pressure on escalating prices. Even so, when price hikes of 5 rupees (about 11 cents) per liter of gasoline and 3 rupees (6 cents) per liter of diesel were announced, the outcry was tangible.
The hikes represent a roughly 10 percent increase in fuel cost, but India’s prices had risen barely more than 10 percent over the last year while prices spiked markedly in more developed markets.
Cargo transportation companies will pass the costs on. Logistics providers in the India, blessed with plentiful and cheap labor, find fuel eating up an escalating proportion of their operating expenses — often more than half. Even the Indian Railways said it would have to pass on the cost of more expensive fuel to its shipper customers, though the onus will be on the railways to provide new capacity as soon as possible as rail is a clearly more fuel-efficient means of transporting cargo than truck.
Most logistics companies in India operate with contracts where fuel costs can be passed on to customers in the form of higher rates, and rates have jumped as high as 30 percent this year (even higher than fuel costs have risen), indicating that companies want to recover a larger portion of their operating costs.
Fuel price rise in India to be passed to customers
