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The escalating conflict in Iran has led to increased fuel prices, resulting in higher delivery costs for packages.
Effective April 17, Amazon will implement additional surcharges on its sellers. Similarly, UPS, FedEx, and USPS have introduced fuel surcharges to offset the surging fuel expenses.
The spike in fuel prices is causing a noticeable impact at the gas stations, leaving many drivers stunned by the rising costs.
“It’s $137 dollars. That’s significant,” noted Jill from Pleasant Hill, reflecting on her recent experience filling up her tank on Sunday.
Since the conflict involving the U.S. and Israel with Iran began, the Strait of Hormuz has been closed. This vital corridor for oil shipments from leading producers has remained inaccessible, pushing oil prices higher and subsequently increasing 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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