If you have a business in the transportation sector, you will have noticed that your costs are starting to skyrocket.
Especially because fuel prices have risen by 21.3% in the last year, while electricity bills have increased by more than 190%.
But why do these increases occur? To what extent do they affect you? We see it in this article.
Why prices are rising
Although fuel increases have a greater impact on the bottom line of logistics and transportation companies than electricity, both items can exponentially increase operating costs.
For this reason, we will distinguish the causes of these sharp increases.
Causes of the increase in fuel prices
One of the main reasons for the rise in gasoline prices is the increase in the price of oil.
On the one hand, oil demand has grown by 15% in recent years, mainly because countries such as India and China consume much more crude oil than before.
The fact that there is greater demand for a limited good can only have one sure consequence: higher prices.
The increase in demand is compounded by other factors such as oil speculation in the energy markets, political instability in the Middle East and the fall in the value of the euro against the dollar.
Causes of the increase in electricity prices
The price of electricity is a consequence of the upward escalation of the wholesale market.
The reasons are varied:
- Increase in CO2 emission rights in Europe: companies that emit CO2 have to pay more for the pollution they produce. Moreover, these rights have increased by 100%.
- The revaluation of natural gas in international markets: in order to pollute less, coal is no longer being used to produce electricity. Instead, natural gas is used, which is more sustainable. This year, the main European natural gas market (TTF) has increased its quotation by 400 % compared to the previous year.
- Electricity demand always increases at certain times of the year, such as winter or summer.
How it affects the transportation sector and possible solutions
Everyone has to use electricity to manufacture and market products, and fuels to transport those goods to the end consumer.
How the increase in gasoline prices affects
From the beginning of this 2021 until now, fuel has risen approximately 21%. Filling up a truck’s fuel tank costs €70 more than in January of this year.
This increase is a significant expense that further erodes the low profit margin.
However, not everything is so negative: highway tolls are going down by 0.11% on average. In addition, 640 kilometers of highway will be freed up by 2021.
Specifically, 400 kilometers of the AP-7 will stop charging tolls (between Tarragona and Barcelona and from this city to the border crossing of La Jonquera) and 215 kilometers of the AP-2 Zaragoza-Mediterráneo will be free of charge. However, on the AP-9 (Galicia) a 0.92% increase will be applied and the Government is studying the implementation of a system of vignettes, drivers who use the highways and freeways will have to pay an amount still to be determined based on the kilometers traveled.
How the increase in electricity prices affects
The 35% increase in electricity bills over the course of this year will mainly affect facilities, logistics warehouses and refrigeration companies, increasing operating costs by around 40%.
Cold logistics companies are forced to change the way they work, reduce profits as much as possible and pass on part of the increase in prices.
Search for solutions
This situation has led companies in the transport sector to look at other alternatives:
- Hydrogen: which has begun to be used by public transport, in particular by the railway sector and urban buses. In fact, Toyota has announced its intention to mass-produce hydrogen fuel cell modules for trucks starting in 2023.
- Biofuel: composed of a mixture of organic substances. Repsol was the first to produce biofuel for the aviation sector.
Although the positive side of this is that these energies are less polluting, it is true that if you have a transport company it will take some time to see their use.
We hope that this article will make it a little clearer to you what this price increase is due to and how it can affect you.
And if you have any questions about this or any other issue related to your transportation business, fill out this form and we will be happy to help you.
