How rising cost of fuel is affecting the logistics sector in Nigeria ⛽

How rising cost of fuel is affecting the logistics sector in Nigeria ⛽

Since when Nigeria's President, Bola Ahmed Tinubu declared that “the fuel subsidy is gone” during his inauguration speech in May, the cost of fuel across the country has remained on the increase, almost more than double of the initial cost.

The rising cost of fuel in Nigeria is significantly impacting the logistics sector, particularly ride-hailing and delivery services. Since the removal of fuel subsidies, the cost of fuel has almost doubled, leading to increased operational expenses for transportation and delivery companies.

Ride-hailing platforms like Bolt and Uber have raised their minimum fares to offset the higher fuel costs. Bolt increased its minimum fare from ₦‎650 to ₦‎800 in Lagos and similar increments in other Nigerian cities, while Uber's minimum fare went from ₦700 to ₦850 across the country. However, the Amalgamated Union of App-Based Transport Workers of Nigeria has called for even higher fare increases, asking for prices to be raised by over 200% and setting minimum fares at ₦‎2000 ($4.30).

Logistics companies have also been affected by the fuel price hike, leading to an increase in delivery fees. Customers are now facing higher charges for deliveries, which is impacting their willingness to use such services. Many find the increased costs burdensome and are opting for alternatives or canceling orders altogether.

One potential solution to mitigate the impact of rising fuel costs on the logistics sector is the introduction of electric vehicles (EVs) for delivery. However, the lack of steady power supply in Nigeria poses a challenge for the adoption of EVs, as companies would still need to rely on fuel-powered generators for charging.

Despite the challenges, some logistics startups remain optimistic and are focusing on leveraging technology to build resilience in uncertain times. The logistics industry in Nigeria is facing significant adjustments as it navigates the impact of fuel price increases, seeking innovative solutions to maintain efficiency and meet customer demands.

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