We have to raise prices. We can dictate prices due to high demand, carriers say

The price of petrol and diesel has already exceeded 37 and 36 crowns per liter. Gasoline is thus the most expensive since the end of October 2012, diesel since October 2014, according to data from CCS, which has been monitoring prices for a long time. “The increase has a direct impact on all about ten thousand freight carriers in the Czech Republic,” says Martin Felix, spokesman for the Česmad Bohemia truck and truck association.

“Costs have risen by up to 20 percent for carriers. They have to pass them on entirely to their customers – traders – as carriers’ margins range from one to three percent. Those who do not negotiate a price increase will end up in business, “says Felix.

Rising fuel prices in the Czech Republic

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Fuel costs usually account for a third of all carriers’ costs. Some have contractually ensured with their customers that the movement of fuel prices is automatically recorded in the agreed transport prices. “For AdBlue, however, no one expected a fourfold price increase, which carriers now have to negotiate with customers,” adds Felix.

One of the largest transport companies in the Czech Republic must also rise in price. The company Icom Transport, based in Jihlava, which operates, in addition to eight hundred buses and three hundred sets of trucks, has currently increased fuel costs by 50 million crowns a year. “Fuel costs have increased by twenty percent, we have to pass on prices to our customers. These are often companies from the food industry, so I believe that, among other things, the end consumer will pay extra for food, ”says Kateřina Kratochvílová, Chairwoman of the Board of Icom Transport.

While large carriers such as Icom may benefit from a large fleet when negotiating prices with customers, smaller carriers run the risk of failing to push contract increases and having to bear the increased costs on their own shoulders. “Fortunately, the demand for transport is so great that we can dictate prices. We have to say goodbye to everyone who does not accept the increase, “says Miroslav Zavřel, CEO of Autodoprava Zavřel. In the past, he would have lost contracts under the same circumstances.

The small carrier operates four trucks that “swallow” about ten thousand liters of diesel per month. “Fuel costs rose by about a hundred thousand crowns a month to 350 thousand without tax. We make it more expensive for all customers, by an average of ten percent, “adds Zavřel.

Increasing fuel prices are far from the only woes of carriers. “This factor is certainly not as strong as the growing shortage of professional drivers. There are also no vehicles on the market, and the delivery of new ones has been delayed for several months across suppliers, ”says Petr Kozel, Chairman of the Board of Directors of VCHD Cargo. According to him, small carriers that have not achieved a price increase for their customers are already closing down their business.

Just as carriers cannot not pass on the increased costs to their customers – traders – so they will not incur extra costs, but will pass them on to the prices paid by final consumers, recalls UniCredit Bank chief economist Pavel Sobíšek.

“Today’s situation is different in that it increases the price of so many items at once that the process of passing on increased costs to prices for final consumers is faster than before, when usually only one item increased in price and the others stagnated,” explains Sobíšek. Although the prices of final products are rising continuously, a significant increase is expected to come with the arrival of the new year. “Most companies will aim to reset their pricing policy on January 1,” adds Sobíšek.

According to analysts, fuel prices should rise by the end of the year, at best stagnate. The increase is due, among other things, to a combination of rising oil prices and a strengthening US dollar.

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