Increases in fuel price drive transport businesses into difficulties
Lately, petrol prices have hit its high of the year when the Covid-19 epidemic was basically under control, transportation activities as well as goods production gradually recovered. However, as the cost of fuel rises, carriers are forced to raise prices or take losses.
Nguyen Anh Tung, who lives on Le Trong Tan Street in Ho Chi Minh City’s Tan Phu District, runs a transport company to carry experts for the city Hi-tech Industrial Park, said that every day, he shuttles experts more than 60km.
On average, he consumes about 150 liters of gasoline nearly 2,000km per month. Gasoline prices have increased as high as now; therefore, the vehicle owner has to pay an additional VND1- VND1.3 million per month.
Chairman of Mai Linh Group Ho Huy said that the prolonged epidemic caused transport enterprises’ revenue growth had dropped to the bottom line. Gasoline prices account for 40 percent of the freight cost. Therefore, rising fuel prices has put transport companies in an untenable condition not to mention fear of the epidemic, travelers don’t want to take a trip.
The owner of Hung Mai bus company running in the Ho Chi Minh City - Quang Nam route said that because people's travel demand is very low while gasoline prices are high, he decided not to resume passenger transport activities on fixed routes to cut losses. A representative of Tran Dung transport business said that from the beginning of the year until now, the contract has decreased sharply whereas the cost of testing for Covid-19 for drivers and vehicle disinfection increased.
Now, with the increase in gasoline prices, transport businesses have bumped into more difficulties. A leader of Tran Tai transport company for the North-South route said that each container truck from Ho Chi Minh City to Hanoi has a revenue of about VND40 million (US$1,754) but he spends VND14 million on fuel. Now the price of fuel spiked, the company had no choice but raise prices by 10 percent or 20 percent.
According to Chairman of the Ho Chi Minh City Transportation Association Bui Van Quan, with an already high operational cost and the impact of the Covid-19 epidemic, fuel costs are adding to the woes of logistics and transport companies. Enterprises have not yet considered the plan to increase freight rates to retain customers, but if the price of gasoline does not decrease in the coming time, they will certainly have to raise prices.
Many businesses in other fields raised their concern about the rising fuel prices and oil prices. General Director of Liksin Corporation Nguyen Ngoc Minh Thi said that in the past time, the price of paper materials has continuously increased, driving enterprises into difficulties. He fretted that fuel price increases leading to a steep jump in paper materials.
According to General Director of Ba Huan Company Pham Thi Huan, all kinds of ingredients have increased by 20-30 percent in the food industry in general meanwhile, purchasing power is very weak as are less inclined to spend more despite various promotions and discounts offered by the company.