Diesel flew into space: Finnish carriers require fuel at a special price

Diesel fuel prices have flown into space, Finnish carriers believe. They demand emergency measures from the government, including special prices for transport companies.

In September, wholesale and retail prices for diesel fuel in Europe set a new record. According to the Frankfurt Stock Exchange, the wholesale price rose in the first month of autumn to $ 1,449 per ton — the highest price in history. Before the Iranian war, fuel cost on average two times cheaper.

A new escalation in the Iranian crisis, low stocks in the United States and a ban on fuel exports from Russia is not given any hope that fuel will become cheaper in the near future.

"At the moment, the main problem of the transport sector is the cost of fuel. In early September, the price of diesel fuel in some areas exceeded 2.5 euros per liter. For many companies, such a price level is not feasible. Since fuel makes up a significant part of transportation costs, a sharp increase in prices instantly reduces profitability," said Anssi Kujala, Managing director of the Finnish Transport and Logistics Association (SKAL).

According to him, Finland cannot influence world oil prices or geopolitical crises, but is able to influence the costs arising from decisions taken at the national level.

"That is why we proposed to reduce the mandatory share of biofuels in the fuel sold (the so-called distribution obligation), reduce fuel taxes and accelerate the introduction of a system of benefits for diesel fuel for professional carriers. These measures could quickly ease the financial burden on companies," said the head of SKAL.

The introduction of a system of benefits for diesel fuel for professional carriers is a step in the right direction, but even this measure alone is not enough.

"The amount of tax refund should be tangible in order for the system to really support the competitiveness of the transport sector — especially in the face of rapidly rising costs and how competing countries support their logistics industries in various ways," Anssi Kujala said.

He cited data from a survey of transport companies, according to which they now see their profitability at a below-average level.

"When the price of diesel fuel increases by several tens of cents per liter, this can have critical consequences for the company's financial results. Unfortunately, during last year's spring negotiations on the budget framework, the government did not take measures to reduce the high fuel costs of transport companies, although the situation with energy prices required a revision of approaches. Since then, the situation has become even more serious, and it is no longer possible to postpone decision—making," the head of SKAL continued.

Finland cannot just watch other countries introduce benefits, as it is already in a difficult logistical situation due to its geographical location.

"Solutions are needed now so that the Finnish economy continues to work," added the head of the Finnish Transport and Logistics Association.