How Hike in Fuel Prices Affects Efficiency of the Logistics Sector

The primary threats to the global supply chain have shifted from the pandemic to military engagements between Russia and Ukraine

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As the world recovers from the catastrophic COVID-19 outbreak, the country faces a number of obstacles. This pandemic has impacted people's lives all over the world, and the country's situation needs restructuring, after having faced a sequence of lockdowns and quarantine measures. Inflation rose, resulting in rising costs for critical commodities such as cooking oil, LPG, gasoline, and diesel. The recent increases in fuel prices have caused great discomfort across the country.

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Fuel costs and their impact are an integral part of the logistics industry

The primary threats to the global supply chain have shifted from pandemics to military engagements between Russia and Ukraine, as well as the resulting geopolitical and economic uncertainty. Conflict, on the other hand, will have major geopolitical, economic, trade, and automobile industry implications in a more globalized and integrated supply chain. Soaring oil and gas prices, as well as the deployment of emergency reaction plans by shippers and carriers, have had a variety of effects on logistics and distribution operations in the moments after Russia's intervention in Ukraine. This not only disturbed output in all sectors, but also disrupted component delivery to certain regions of Europe and abroad, as well as upstream supply chains, posing other hazards. Because of the impending situation, oil market prices are likely to break all prior records in the coming few months.

Fuel price spikes can cause delays and devastation for freight management organizations, while price drops can result in higher short-term profitability and increased market rivalry to offer consumers with the best deals. The gasoline fee is calculated by the logistics business using the previous week's fuel price. There is a delay among fuel prices and fuel surcharge rates when fuel prices rise dramatically. The logistics industry's bottom line suffers as a result of the delay, if fuel prices fall sharply.

India's contribution to the logistics industry

India has been the world's third-largest crude oil importer, and while higher prices have harmed currencies and fueled inflation, they are also widening India's commerce and current account deficits. The objective of Prime Minister Gati Shakti scheme is to chart a new course for contemporary infrastructure development, reducing project cost and time overruns through planning, implementation, and monitoring, and emphasizing the importance of resolving the current situation in the next few years.

PM Gati Shakti Scheme

PM Gati Shakti scheme is an initiative holding immense potential that aims to create a paradigm shift and the establishment of future mobility infrastructure projects in multimodal environments, taking into consideration in-program connection. Oil and gas exploration will be expanded from 25,000 square kilometers to 50,000 square kilometers by the government, with production expected to rise substantially over the next four years. From transportation infrastructure to implementation and use, it enables a true public-private collaboration in infrastructure development. India's economy will be significantly strengthened as a result of infrastructure development.

Summing up

The goal of Gati Shakti is to build a network in which roads feed into railway lines, which feed into ports, effectively transferring goods from the countryside to the harbors. Road transport operators will undoubtedly be essential actors, simply because roads account for the majority of traffic in India, with 64 percent of freight travelling by road. Even here, tech-based logistics will be in charge, as Gati Shakti would be all about employing current technology and cutting-edge IT tools to coordinate infrastructure planning.

One of Gati Shakti's key goals is to boost digitalization penetration. Another sector where an efficient supply chain and sophisticated equipment are at the forefront is the growth of Direct To Consumer (D2C) brands. Because of the innovation within the last mile delivery arena, the user experience has shifted dramatically, and customers may now choose when, where, and how each delivery is made.