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Volatile fuel prices pose difficulties for freight forwarding businesses

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Cargo lorries are seen at the Bayintnaung Wholesale market.

Fuel price fluctuation in recent days wreaked havoc on the freight forwarding businesses, Ko Htaw Gyi, a truck operator on the Yangon-Pathein Road told the Global New Light of Myanmar (GNLM).
On 22 August, the price of diesel was K2,820 per litre. It was priced at K2,850 per litre in Pathein city. A six-wheel truck (16 tonnes capacity) needs 20 gallons for 230 miles long Yangon-Pathein round trips. Fuel cost is around K256,000 per truck, a driver Ko Maung Yu told the GNLM.
The retail reference rate of fuel oil per litre stood at K1,965 for Octane 92 and K2,325 for diesel on 4 May 2022. The daily reference fuel oil prices were recorded at K2,250 for Octane 92 and K2,690 for diesel on 20 June, K1,700 for Octane 92 and K2,130 for diesel on 18 July, K1,615 for Octane 92 and K1,970 for diesel on 7 August and K2,365 for Octane 92 and K2,820 for diesel on 16 August respectively, according to the official reference prices’ data.
The minimum price was K1,610 per litre and the maximum price was K2,410 for Octane 92, while the diesel reached the lowest of K1,970 and the highest of K2,820 per litre.
During the four months (May-August), there is a gap of K795 for Octane 92 and K850 for diesel. The price gap widened in August. The price of diesel inched higher to nearly K4,000 per gallon this month.
As a result of this, the fuel cost adds to K80,000 for Yangon-Pathein round trips. The freight rate of rice increased from K850 to K1,100 per bag on the Pathein-Yangon route. However, the rate remains unchanged at K750 per rice bag on the Hinthada-Yangon route, the GNLM quoted Ko Aung Thet, a truck owner, as saying.
It is hard to raise the price when the volume of the goods to be delivered is usually low in the rainy season.
The truck fare is K240,000 for the Yangon-Pathein route and K220,000 for the Pathein-Yangon Road. The gross income is K460,000 for the Yangon-Pathein round trip. When labour wages, food and fuel cost and toll rates for bridges and highways are deducted, only K50,000 are left for each route, U Htaw Gyi, a truck owner, stressed.
If fuel prices had stayed at the rate recorded in July 2022, we would have made a profit of K100,000 for each trip, said a truck owner Ko Cho.
A six-wheel truck needs about 90 litres of diesel for Yangon-Pathein round trips.
For the 190 miles long Yangon-Hinthada round trip, the truck operator generates a gross income of K350,000. However, the profit is extremely low at K10,000 for that route.
We are struggling with volatile fuel prices. Despite the low profit, we managed to run the freight forwarding operations to maintain good relationships with customers and create jobs for our drivers, the GNLM quoted Ko Zaw, a truck operator, as saying.
Only some trucks are running at present.
Moreover, a truck operator Ko Nay said “We have less chance to put aside for the consequences of vehicle malfunctions and maintenance despite the low profitability.” — TWA/GNLM

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