Date:22/07/2008 URL: http://www.thehindubusinessline.com/2008/07/22/stories/2008072251251200.htm

Back Courier industry reels under high oil price; costs rise 30%

How it impacts
Overall costs incurred by domestic couriers have increased between 22 and 25 per cent.
Blue Dart says owing to rising input costs, price hike in ground will be about 10-15 per cent, while on air it would be 15-20 per cent.

To cost more: A file photo of a Blue Dart’s upgraded warehousing facility at Bhiwandi’s Poorna village near Mumbai.

Shubhra Tandon

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Mumbai, July 21

While the plight of the airline passengers is well known, there is another segment that is reeling under the surge of oil prices - the express and courier industry. More bad news coming their way, the airlines have further increased charges by Re 1 per kg taking the total hike to Rs 6 per kg in the last two months.

Bearing the brunt of high oil prices, the overall costs incurred by domestic couriers have increased between 22 and 25 per cent. In some cases, the companies are saying the costs have gone up to as high as 30 per cent.

Double hit

“We have been subject to a double hit by the rise in oil prices.

On the one hand, with the skyrocketing aviation turbine fuel prices, the airlines increased charges and then the hike in petrol and diesel prices of Rs 5 and Rs 3 respectively has directly hit our local business which uses road transport,” said Mr R.K. Saboo, Deputy Managing Director, First Flight Couriers Pvt Ltd and Chairman, Express Industry Council of India, the organisation representing a cross section of members drawn from international and domestic express companies.

The fuel surcharge has been up from 10 per cent to a whopping 20 per cent in the last two months, Mr Saboo told Business Line. Talking of the end consumer, the tariff has been up by 15-20 per cent. In actual terms, a consumer will be paying around Rs 60-65 now for a courier against Rs 50 before the increase, he said.

Fuel surcharge

Another major domestic express player DTDC said that the company has absorbed 50 per cent of the hike and another 50 per cent has been passed on to the customer as fuel surcharge. “The surcharge has been up from 10 per cent to 18 per cent which means consumer is paying around Rs 3 per kg more than before,” said Mr Subhasish Chakraborty, Chairman and Managing Director of DTDC.

He added, “The airlines need to be rational in increasing the charges. There has been a flat increase across all sectors be it Mumbai to Ahmedabad or Mumbai to Delhi and so on. How is it justified when the ATF prices vary from sector to sector and so does the consumption of fuel?”

Blue Dart in a statement last month said owing to rising input costs, price hike in ground will be in the region of 10-15 per cent, while on air it would be in the range of 15-20 per cent.