Fuel price in the UAE has risen by 10% taking the cost of a litre of fuel to AED 3.12 and in the UK fuel prices per litre sit at £1.49p – what does this mean for the last-mile industry?
With the gig-economy still in a boom and certain major players announcing a loss in share price, whilst others are still to make profit, is it time the industry woke to a different play? Focusing on profit as opposed to cost saving or worse still shifting the costs to the riders?
Many leaders in industry are now actively seeking an alternative to petrol vehicles for their delivery fleets, but it’s not as simple as switching out vehicles ‘like-for-like’ there is a consideration to acknowledge the vehicles are different in ride, use and range, whilst the functionality is somewhat superior, the benefits drastically outweigh the traditional vehicles.
Let’s place some stats on this increase:
January 2021 fuel price AED 1.81
Costing the riders around AED 3,800 per year in fuel spend
March 2022 fuel price AED 3.12
Costing the riders around AED 6,800 per year in fuel spend
What does this look like for the 15,000 delivery motorcycles on the UAE roads?
15,000 vehicles cost of fuel equals AED 102million per year.
That’s an additional AED 10million overnight!
However, that isn’t the only cost. With riders facing the additional expense, it requires them to make up for the additional costs with more deliveries – simply economics – but that results in more working pressure leading to inevitable dramatic outcomes.
The switch to alternative methods of delivery are inevitable and in certain cities, the adoption is happening. Why is uptake not as quick if the economics stack up? This is down to a CapEx vs. OpEx consideration. Most last-mile aggregators lease their vehicles and riders are supplied by manpower companies, they are asset light organisations and placing pressure on the fleet operators to switch provides them the CapEx consideration.
The team of ONE MOTO have been working in this for several months, understanding the issues surrounding lease vs. ownership and we have a solution to announce “you can now lease a fleet of electric delivery motorcycles from ONE MOTO at the same price as you currently pay”.
This equals a cost-saving of up to 74% and driving the bottom line profits – supporting the entire eco-system of deliveries.
In the UAE a modest salary for delivery riders is around AED 36,000 (gross take home) so the additional fuel price increase is a burden they don’t need.
We spoke to three delivery riders in Dubai (The Sustainable City) this morning to understand the affects and considerations, here’s what they had to say:
AK: “high prices affects me and worries me every day. it costs too much to do my job, I want to change, but can’t, my company can’t help. I fill my bike around seven to ten times a week with AED 15-20 each, as I don’t have cash to fill up full”.
JA: “it makes coming to work harder, I live far from my shift starting. I pay fuel from my pocket and from tips. I don’t have much salary on the end of the month, it costs a lot, but more deliveries I get a bonus, it helps”.
AM: “when I started work at [my company] last year, it was good job, too hot in the summer and during Ramadan it’s hard but my choice. More expensive petrol hurts my salary takings. If I leave, what do I do”?
This is of course a small slice of the delivery rider’s experiences, but shared as a collective. We asked them how they would feel if they never had to pay for fuel and had less deliveries, and earned more money. Of course they all said yes, they would want this, but they all said ‘it couldn’t happen, my company wouldn’t help’.
What will it take for the operators and aggregators to EVolve? Cost is one consideration, performance of “new tech” another – with these answers covered, guarantees in place, it might be time to make the switch.
Please reach out to the ONE MOTO team to discuss Cost of Ownership with real time simulations for your organisation email@example.com.
Thank you for reading.