{"id":645,"date":"2023-10-01T05:24:19","date_gmt":"2023-10-01T05:24:19","guid":{"rendered":"https:\/\/one-moto.com\/?p=645"},"modified":"2024-06-20T04:38:04","modified_gmt":"2024-06-20T04:38:04","slug":"fuel-price-increase-the-demise-of-the-last-mile-industry","status":"publish","type":"post","link":"https:\/\/one-moto.com\/eth\/fuel-price-increase-the-demise-of-the-last-mile-industry\/","title":{"rendered":"Fuel Price Increase: The Demise Of The Last-Mile Industry"},"content":{"rendered":"\n

IN THE UAE, THIS YEAR, WE\u2019VE SEEN FIVE PRICE INCREASES IN FUEL, WHICH HAS LED TO THE LAST-MILE, LOGISTICS AND DELIVERY INDUSTRY BEING AFFECTED DRASTICALLY. IN THIS ARTICLE WE TALK ABOUT DELIVERY RIDERS IN THE UAE, WE BREAK IT DOWN TO PREDICT A DRAMATIC SHIFT IN THE OPERATIONS AND THE AFFECTS TO THE INDUSTRY AS WHOLE.<\/strong><\/p>\n\n\n\n

In case you are not familiar with the hyper-growth and uber-competitive UAE delivery market, the majority of companies operate with the riders being responsible for paying their own fuel.<\/strong><\/p>\n\n\n\n

Let\u2019s run this scenario:
Since January 2023 fuel price was at AED 2.78 a litre as of today (1st October 2023) this is currently AED 3.33.<\/p>\n\n\n\n

The average delivery rider (food delivery aggregators) travels:
* 6,000kms per month
* Refuelling five times per week (partial filling)
Downtime is an additional in-direct cost \u2014 which has been calculated at five hours per month, per rider.<\/p>\n\n\n\n

In January 2023 these riders were spending\u00a0AED 5,844 per year<\/strong>.
With this month\u2019s prices, they are\u00a0projected to be spending spending around AED 7,000 per year<\/strong>. Equating to an\u00a0increase of over 19%. <\/strong>With the average rider earning\u00a0AED 36,000 per year<\/strong>.\u00a0Is this sustainable?<\/p>\n\n\n\n

WHAT COULD THIS MEAN?<\/strong><\/p>\n\n\n\n

    \n
  1. Delivery riders choose not to deliver \u2014 it\u2019s not financially viable.<\/li>\n\n\n\n
  2. Operators absorbing the cost of fuel \u2014 the industry will crash.<\/li>\n\n\n\n
  3. Restauranteurs boycotting aggregators \u2014 already in discussion.<\/li>\n\n\n\n
  4. Aggregators will fold \u2014 or we\u2019ll see a consolidation\/M&A.<\/li>\n<\/ol>\n\n\n\n
    \"\"<\/figure>\n\n\n\n

    Adopting a reactive response to the defined shortcomings of fuel increases is a disaster. Transport contributes around 40% of the cost of delivery<\/strong>. Not identifying the opportunities now, will surely lead to the demise of many market leaders.<\/p>\n\n\n\n

    In addition to this, the Roads and Transport Authority (RTA) have suggested adding a AED 1 fee per delivery<\/strong>, with many of the aggregators delivering over 1million per month, this additional increase could devastate the aggregators, or indeed increase the delivery costs for each of their customers \u2014 most likely.<\/p>\n\n\n\n

    WHAT IS THE SOLUTION?<\/strong><\/p>\n\n\n\n

      \n
    1. Being proactive, switching the operational structure of the business?<\/li>\n\n\n\n
    2. Tech-aggregators owning their fleet, instead of the asset-light approach?<\/li>\n\n\n\n
    3. Work collaboratively with restauranteurs\/customers to offer an alternative?<\/li>\n\n\n\n
    4. Choose an alternative mode of fuel based transport?<\/li>\n\n\n\n
    5. Government to subsidise the fuel?!<\/li>\n\n\n\n
    6. Use the impending AED 1 delivery fee to purchase a fleet of EVs?<\/li>\n<\/ol>\n\n\n\n

      What would happen to the last-mile delivery sector if the exodus ensues? Is another fuel price increase: the demise of the last-mile industry?<\/p>\n\n\n\n

      That\u2019s just speaking about the fuel prices and profitability, the harm to the environment from these commercial ICE vehicles is shocking, I\u2019ll save these stats for another entry.<\/p>\n\n\n\n

      If you\u2019d like to discuss switching your fleet electric (just like Domino\u2019s in France, Zomato\u2019s 2030 commitment and Amazon\u2019s announcement), please reach out and we can show you how switching your fleet will ensure longevity and profitability to this industry. So, is the fuel price increase: the demise of the last-mile industry?<\/p>\n","protected":false},"excerpt":{"rendered":"

      IN THE UAE, THIS YEAR, WE\u2019VE SEEN FIVE PRICE INCREASES IN FUEL, WHICH HAS LED TO THE LAST-MILE, LOGISTICS AND DELIVERY INDUSTRY BEING AFFECTED DRASTICALLY. IN THIS ARTICLE WE TALK ABOUT DELIVERY RIDERS IN THE UAE, WE BREAK IT DOWN TO PREDICT A DRAMATIC SHIFT IN THE OPERATIONS AND THE AFFECTS TO THE INDUSTRY AS […]<\/p>\n","protected":false},"author":1,"featured_media":646,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_uag_custom_page_level_css":"","footnotes":""},"categories":[27],"tags":[168,172,84,156,158,170,160,49,126,61,167,159,154,169,174,155,54,162,55,166,173,163,161,165,88,175,164,157,171],"class_list":["post-645","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-alternative-fuel","tag-amazon","tag-delivery-aggregators","tag-delivery-industry","tag-delivery-riders","tag-dominos","tag-economic-impact","tag-electric-vehicles","tag-environmental-impact","tag-fleet-electrification","tag-fleet-ownership","tag-fuel-costs","tag-fuel-price-increase","tag-government-subsidy","tag-industry-longevity","tag-last-mile-industry","tag-logistics","tag-market-consolidation","tag-operational-costs","tag-proactive-solutions","tag-profitability","tag-reactive-response","tag-restaurant-boycotts","tag-rta-fee","tag-sustainability","tag-tech-aggregators","tag-transport-costs","tag-uae-delivery-market","tag-zomato"],"featured_image_src":"https:\/\/one-moto.com\/eth\/wp-content\/uploads\/2024\/05\/OM-Byka-NewCherryRed-INTW-e1668661130243.jpeg","author_info":{"display_name":"One Moto","author_link":"https:\/\/one-moto.com\/eth\/author\/admin\/"},"acf":[],"yoast_head":"\nFuel Price Increase: The Demise Of The Last-Mile Industry - One Moto Ethiopia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/one-moto.com\/eth\/fuel-price-increase-the-demise-of-the-last-mile-industry\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Fuel Price Increase: The Demise Of The Last-Mile Industry - One Moto Ethiopia\" \/>\n<meta property=\"og:description\" content=\"IN THE UAE, THIS YEAR, WE\u2019VE SEEN FIVE PRICE INCREASES IN FUEL, WHICH HAS LED TO THE LAST-MILE, LOGISTICS AND DELIVERY INDUSTRY BEING AFFECTED DRASTICALLY. 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IN THIS ARTICLE WE TALK ABOUT DELIVERY RIDERS IN THE UAE, WE BREAK IT DOWN TO PREDICT A DRAMATIC SHIFT IN THE OPERATIONS AND THE AFFECTS TO THE INDUSTRY AS…","_links":{"self":[{"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/posts\/645","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/comments?post=645"}],"version-history":[{"count":0,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/posts\/645\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/media\/646"}],"wp:attachment":[{"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/media?parent=645"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/categories?post=645"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/one-moto.com\/eth\/wp-json\/wp\/v2\/tags?post=645"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}