Freight forwarding agents grappled with decrease in fuel oil price
The prices of fuel oil remain low in recent days and the price gap between Octane for personal use cars and diesel for trucks has narrowed.
The fuel oil prices stood at K2,005 per litre of Octane 92, K2,110 for Octane 95 and K2,385 for diesel on 26,27 and 28 November. Diesel price plummeted to the lowest of K1,970 per litre on 7 August 2022 and rocketed to the highest of K3,225 on 26 August. Some companies and freight forwarding agents agreed to fix the freight rate in the contract when the diesel price was above K2,500 per litre.
The freight rate was changed following the increase in diesel price. It has been about one week since the diesel price was below K2,500 per litre. Consequently, some companies and agents have come to reduce the freight rate to the previous rate.
However, the agents still cannot cut the freight cost as they did not sign any contract with the truck operators. The agents could easily find trucks when freight rates increased. Yet, they are struggling to find the trucks when the freight rate is reduced. That being so, they cannot offer the lower rate to the truck owners, forcing the agents to bear that cost.
The fuel price dip brings benefits to truck drivers. However, companies and agents are facing certain difficulties in the truck service industry. Freight volume usually drops in September-December. Only one month is remaining now, Ko Myint Thaung, who has been working in the freight forwarding industry told the Global New Light of Myanmar (GNLM).
In summer, the truck freight forwarding market will raise its head and freight flow will return to normal. Freight rate moves up and down depending on the balance between the freight volume and the number of trucks. The price of fuel is positively related to the profit of the owners.
“The truck rate climbs on the back of high freight volume when the number of trucks is low. Low freight volume and a high number of trucks resulted in a decrease in truck rate,” U San, a truck operator, told the GNLM.
Prior to the open season, agents still can hire trucks with a low truck rate when the diesel was priced under K2,500 per litre. Nonetheless, they have to add extra costs to the truck operators during the opening season.
The price of diesel stayed over K2,500 per litre for three months. On 22 November, it slid below K2,500 per litre. Between 25 and 28 November, it was valued under K2,400 per litre, the daily price data stated.
If the price of diesel is worth K3,225 per litre, the price stands at around K15,000 per gallon and K700,000 per container. They are K11,000 per gallon and K550,000 per container if it is calculated with the market price of K2,400 per litre.
For the 230-mile-long Yangon-Pathein round trip, a six-wheel truck with a load capacity of 6,000 tonnes has to consume 20 gallons of diesel (75.7 litres).
If the diesel price is down by K100 per gallon. The truck drivers can lessen the energy cost of K10,000 for that trip, Ko Maung Yu, a six-wheel truck driver, told the GNLM. — TWA/GNLM
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