Businesses struggling due to high gasoline prices

February 24, 2022 - 09:09
Many businesses are struggling because of high gasoline prices.


People filling up at a Petrolimex gas station in HCM City's District 5. VNS Photo

HCM CITY – As gasoline prices rose to the highest level in eight years in February, the logistics industry is under increasing pressure, forcing businesses to bump up service prices. 

Manufacturing enterprises are also expected to face many difficulties as costs soar.

On February 21, a litre of RON95 gasoline was VNĐ26,287(US$1.14); a litre of E5RON92 gasoline cost VNĐ25,532. 

With added pressure on freight rates, the price of many consumer goods increased, especially as businesses attempt to recover after months of inactivity.

Trần Việt Anh, deputy chairman of the HCM City Business Association, said the time when gasoline prices increased coincided with businesses in short supply of labour resources. 

Therefore, many enterprises have actively reduced their scale, seriously affecting the production recovery plan of the city in the near future.

Nguyễn Văn Bé, chairman of the HCM City Export Processing Zone and Industrial Park Authority Business Association (HBA), said that an increase in petrol prices will lead to an increase in transportation costs and according to the chain effect, it will cause the price of input materials to soar.

Trần Thành Trung, from Tốc Hành Transport Company in HCM City, specialising in transporting goods on the North-South route, said that during the pandemic, his businesses have been facing many difficulties. Now, some circulation has returned but the gasoline price increase has caused the cost of the business to increase, forcing him to recalculate freight.

Trung said the gasoline price has increased about 30 per cent, adding: “It is a lot for the transport businesses to bear when they had to suffer so much in the pandemic.”

Meanwhile, Lương Trấn Vinh, a driver of Thắng Lợi Taxi in Bình Dương, said the sharp increase in gasoline prices had an impact on both the economy and the status of businesses.

Vinh added: “Gasoline prices account for 40 per cent of the transportation cost, so the sharp increase in gasoline recently has made it difficult for businesses. The price of travel cannot increase according to the price of gasoline because businesses have to compete with other ride-hailing platforms. It is very difficult.”

Trần Đông Dũng, a driver on the Bình Dương - Tân Sơn Nhất International Airport route, told Việt Nam News: “With the current gas price, we can barely make a profit.”

"For 70km back and forth between the two destinations, the driver gets about VNĐ500,000 but he has to pay half for the cost of gasoline and the rest is for meals and parking fees."

He said he may take a break from business. “In such a pandemic, the number of passengers to the airport is low, while the price of gasoline and parking fees have increased," he said.

The increase in gasoline prices has also had an impact on consumer goods. At some markets in HCM City many small traders said that prices increased sharply compared to early this year.

Trần Thị Lũy, the owner of a food shop on Nguyễn Thị Minh Khai Street in the city's District 3, said that raw material prices have increased but she cannot increase her food price.

Lũy said: "I have lost so many customers during social distancing, if I increase the prices now, I will lose more."

Lũy added: "Now I must pay for the higher cost for shipping because of increasing petrol prices."

Lots of fashion shops shared the same issue. They must pay for higher shipping fees but cannot raise the price or they will risk losing customers.

In the bigger picture, the increase in gasoline and oil prices will lead to an increase in transportation charges, and an increase in the price of consumer goods will most likely affect CPI and inflation. – VNS