In San Francisco, the escalating conflict involving Iran has led to increased fuel prices, which are now impacting the cost of package deliveries.
From April 17, Amazon plans to introduce new surcharges for its sellers, while UPS, FedEx, and USPS have already begun implementing fuel surcharges to offset the soaring fuel expenses.
For many drivers, the surge in fuel prices is resulting in a noticeable shock at the gas pump.
“It’s $137 dollars. That’s significant,” remarked Jill from Pleasant Hill, reflecting on her experience filling up her gas tank this Sunday.
The continued closure of the Strait of Hormuz, a vital passage for crude oil shipments from leading producers, has been a consequence of the ongoing conflict between the U.S., Israel, and Iran. This blockade has contributed to rising oil prices, which in turn are elevating gasoline costs.
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To counter rising fuel costs, Amazon plans to tack a temporary 3.5% fuel surcharge on its third-party sellers.
“Transportation costs are a big factor there,” said Dr. Dima Leschinskii, a professor of Finance at Menlo College. “Every company that is involved and has logistics and they have to pay for gas, either they have to absorb this cost, or they will charge the third party that will provide this service. I’m not surprised this is happening, because at some point, Amazon will say we cannot absorb all this cost.”
The e-commerce giant is following in the footsteps of UPS, FedEx and the U.S. Postal Service.
Starting April 26, the USPS is slapping a temporary 8% price hike on certain packages, including priority mail shipments, because of increasing fuel prices.
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That means customers may have to pay more for deliveries.
“That’s crazy,” said Stevie, a driver from San Francisco. “It’s going to slow people down from ordering stuff. Most definitely because you are already paying other costs on top of it.”
“One way or another, this is going to ripple through the supply chain and ripple through our pocketbooks,” said Professor Andy Tsay, a supply chain expert at Santa Clara University Leavey School of Business. “The higher oil prices are affecting shipping and logistics costs. Amazon, UPA, USPS. I don’t think there’s any escape. Mortgage rates are going up. Everyone is talking about affordability since before the presidential election and the geopolitical situation isn’t making things any better.”
Economic experts say as gas prices continue to rise, food delivery apps are also likely to consider fuel-related surcharges.
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