Impacts of costly fuel
It is a well-known fact that fossil fuel is at the center of every economic activity. The prices of fuel determine the prices of all the commodities since the movement of every commodity depends on oil.
In fact, fuel prices affect each and every individual’s life in some ways to some extent.
The Cargo Industry
A cargo industry is the first and foremost that is affected by the fuel price fluctuations. The higher fuel prices mean higher shipment charges. The rise in fuel prices affects the cargo to Africa services as well including trucks, railways ships and airways all and customers try to avoid shipments.
Similarly, low fuel prices bring the cargo charges down and thus boost the growth of the industry owing to the maximum use of its services. The increase in the fuel prices affects the cargo industry in many ways.
Chain Reaction by Fuel Price
The rise in fuel prices actually brings about a chain reaction. When the fuel prices surge, the cargo charges also increase. This increase in the cargo charges means the shipper is going to be charged more to make up for this.
In the similar fashion, when the shipper will be charged more it will make the receiver pay more amount. Therefore, this cycle will end up causing inflation. We can see how a minor change in fuel price affects each and every individual.
Setback to the Cargo to Africa industry
When the fuel price rises, the cargo prices also rise which makes people hesitate to use cargo to Africa services. This hesitation leads to a lesser use of cargo services which reduces the revenue of the cargo industry and thus the industry suffers a setback.
A firm fuel price ensures a steady revenue generated by the cargo industry.
This effect is actually a positive effect. When the fuel price rises, the cargo companies try to mitigate the effect by providing services at a discounted rate so that the cargo to Africa companies are not disrupted.
This thing promotes competition among the cargo companies and in turn, the service rates are decreased. However, these effects remain active for a short and limited amount of time.
Effects on Economy
We know that economy of all the countries is largely dependent at fuel. More fuel prices bring less cargo activity which affects the economy in the longer run.
Even though the effect is not immediate, yet it plays a significant part in the destabilization of the economy. It largely influences the imports and exports of the countries.
Since the logistics company run entirely at the expense of fuel, they are at higher stakes regarding oil prices. If the fuel prices keep on rising and rising, many companies would go down and many would be forced to take loans.
So higher prices of fuel increase the risk for the cargo companies manifolds. Similarly, on the lower level, less shipping activity will be noted.