Oil Price Surge Hits Korea's Delivery and Logistics Sectors

South Korea's retail and logistics industries are reeling from surging international oil prices driven by geopolitical risks in the Middle East. For the transportation sector, where fuel costs directly impact expenses, rising oil prices immediately translate into increased cost burdens. Concerns are mounting that prolonged high oil prices could stimulate overall consumer prices and contract the consumer market.

According to Opinet, the Korea National Oil Corporation's oil price information system, the national average gasoline price stood at 1,900.54 won per liter as of the afternoon of the 9th. Diesel was recorded at 1,923.84 won per liter. Considering that gasoline and diesel prices were around 1,740 won and 1,680 won respectively at the beginning of this month, prices have surged approximately 10% in just one week.

Industry analysts say the delivery and logistics sector has been hit hardest by the sharp rise in fuel prices, as fuel costs are immediately reflected in operating expenses. Owner-operator courier drivers and delivery riders who bring their own vehicles are particularly vulnerable, as rising fuel prices directly reduce their earnings since individuals bear most of the fuel costs.

"Fixed costs for courier drivers are rising, and those operating long-distance routes will be affected more significantly," said an industry official. "Owner-operator courier drivers are facing a situation where they must endure considerable hardship."

As a result, some courier drivers are adjusting delivery volumes or avoiding long-distance routes. Some are reducing deliveries on low-profit routes or taking leave to avoid periods of high oil prices.

A 32-year-old delivery driver working for Kurly and AliExpress said, "Since last week's fuel price surge, people running long distances are saying 'not working is making money,' and some are just taking vacations altogether." He added, "For short distances, fuel costs are relatively lower, so we're delivering reluctantly."

Delivery riders face similar challenges. While motorcycle fuel costs are relatively cheaper and routes shorter than courier services, they cannot escape the impact of rising fuel costs when long-distance orders come in.

"The delivery industry often covers considerable long distances, similar to the trucking industry, so fuel cost burdens are increasing," said a delivery industry official. "Fuel costs typically account for 20-30% of total expenses for riders, but with recent fuel price increases, the perceived proportion could rise to 30-40%."

If high oil prices persist, the impact is expected to extend beyond delivery and logistics costs to overall price increases. "In the short term, the delivery and transportation sectors appear to be taking the hit, but in the long term, the combination of high oil prices, high exchange rates, and high inflation could contract not only the dining-out market but the entire consumer market," said a retail industry official. "Rising fuel prices are a factor that drives up overall consumer prices, so there is significant concern that this could lead to a slowdown in consumption."