The ₹3-per-litre rise in petrol and diesel prices is expected to increase supply chain costs across India, with logistics, quick commerce and consumer goods companies preparing for higher transport and delivery expenses amid weak demand and rising input costs.
Several companies Mint spoke to, including MilkyMist, iD Fresh Food, BigBasket, Zippee, The Organic World, ColdStar and StoveKraft, warned that prolonged high fuel prices could force them to rethink pricing strategies.
If fuel prices remain elevated for several quarters, companies across sectors may tighten free-delivery thresholds, reduce discounting, increase minimum order values, and limit ultra-fast deliveries in lower-density areas, experts and industry executives said.
The bellwether: long-haul trucking
According to Vijay Kumar of the Express Industry Council of India (EICI), an industry body representing India's courier and express logistics sector, long-haul trucking will be among the first segments to feel the impact, followed by the broader road transport network as diesel remains a key component in freight movement. “There will be a cost that will come in because fuel is critical to our flying power,” he said.
Several logistics companies operating in long-distance freight transportation have limited ability to offset costs immediately as they are heavily dependent on fossil fuels, he added. The fuel hikes also come at a difficult time for micro, small and medium enterprises (MSMEs) and exporters, which are already grappling with broader cost pressures.
Madhav Kasturia, chief executive of logistics firm Zippee, said, “Fuel typically contributes 20-30% of last-mile logistics operating expenses depending on delivery density and vehicle mix.” Such a price hike at scale would create a meaningful operational impact, he added.
The latest increase could raise overall last-mile delivery costs by around 2-5%, especially for high-frequency delivery networks handling lakhs of orders every day, he noted. While most delivery companies are likely to absorb the additional costs in the short term, prolonged exposure could eventually result in revised contracts, fuel adjustment clauses, and changes in delivery economics, Kasturia added.
EV cushion for some
Quick commerce platforms are also watching costs closely, although electric vehicle (EV) adoption is helping cushion some of the impact. BigBasket’s Aashutosh Taparia said the impact on its overall delivery cost structure is expected to remain relatively moderate because its delivery model relies on short distances and more than 40% of its deliveries are already fulfilled using EVs.
Taparia added that if fuel prices remain elevated for a prolonged period, the industry could gradually move towards optimising delivery fee structures or encouraging higher basket sizes to offset operating costs.
Deloitte’s Anand Ramanathan noted that recent price hikes on top of existing cost pressures have created a “perfect storm” for consumer companies. This may shift consumer behaviour, with shoppers becoming more value-conscious and choosing cheaper alternatives. “Established brands may fare better than smaller D2C (direct-to-consumer) companies during this economic stress,” he said, adding that rising fuel prices could expedite the transition to EVs in logistics and delivery networks.
Wafer-thin margins
Those operating in quick commerce and food delivery are particularly vulnerable as they already function on thin margins. Other consumer goods companies are also evaluating the impact of higher transportation, packaging and commodity costs on profitability.
iD Fresh Food, which makes ready-to-cook packaged food items, is focusing on operational efficiencies across sourcing, manufacturing and distribution to manage cost pressures more effectively. “However, if there is a sustained increase in input costs, particularly in raw materials, packaging, and logistics, calibrated price increases may become inevitable in the future,” said Rajat Diwakar, chief executive of its India business.
K. Rathnam, chief executive of Dairy products maker Milky Mist, expressed similar concerns. The company has already seen a 17-25% increase in input costs such as packaging materials and other ingredients over the past few months, putting pressure on margins. Any “further increase in fuel price will have a cascading impact on all other input costs to the extent of 5-7%. This will impact margins and the industry may have to take modest price hikes in the same range,” he said.
Cold chain and perishable goods logistics companies are also seeing pressure on inventory planning and procurement costs. Sameer Varma, executive director at cold-chain logistics firm ColdStar Logistics, said both essential and non-essential stock critical to cold chain handling have been affected.
“Stock of essentials and non-essentials that are critical to the cold chain handling of perishables have been affected. Prices are increasing by 12-18% and the period of validity of rates from the suppliers has been reduced as well,” Varma said.
“Operating cost inflation in commodities is trickling through in every direction. There are limited supplies and information about the market is not always available, so it can be difficult to find rates in real time. Planning in such an environment will take a very long time and need a lot of buffers,” he added.
Price hikes have begun
Meanwhile, large FMCG companies have already started raising prices as costs for fuel, packaging and food commodities continue to rise. Higher prices of edible oils, milk, wheat and crude-linked packaging materials have put further pressure on margins, with companies warning that prolonged inflation could slow demand recovery in the coming quarters.
Other D2C brands such as WellBe Foods and StoveKraft have also flagged similar inflationary pressures. While snacking brand WellBe Foods has seen its overall costs increase by 5-8% over the past two months, listed firm StoveKraft, which makes cooking appliances, has already implemented some price hikes in the first quarter.
The company has pre-booked significant input materials and secured arrangements with leading metal manufacturers to procure materials at the previous quarter’s pricing, reducing the impact of volatility, although any further increases will be passed on to customers, StoveKraft managing director Rajendra Gandhi said.
WellBe Foods is also evaluating a potential 6-8% increase in MRP across its snacking portfolio, founder Gaurav Manchanda said. He added that the company has increased bulk procurement to reduce volatility and ensure continuity of supply. On the logistics side, it is moving from multiple delivery points to a more consolidated structure to improve fuel efficiency while strengthening supplier relationships and improving demand forecasting.