VICHAYA PITSUWAN & BUSRIN TREERAPONGPICHIT

Logistics operators say they won't reduce their charges despite the recent sharp drop in oil prices, as they had already lost too much money when oil prices were high.

Logistics providers have had to bear large losses since domestic diesel prices started surging this year, peaking at 44.24 baht per litre in mid-July, said Tanit Sorat, a vice-chairman of the Federation of Thai Industries (FTI) and head of its logistics industry club.

''Generally, logistics charges should be reduced in accordance with the decline in fuel costs, but it was not possible for us to increase service charges promptly every day to reflect daily changes in oil prices at that time,'' said Mr Tanit.

''Operators were obliged to charge their service fees based on fuel costing 34 baht per litre when diesel was at its peak, and we had no choice and had to bear losses.''

High competition in the industry and low bargaining power forced operators to bear higher costs instead of pushing up prices.

''Most local operators are small and medium-sized players who lack negotiating power and require cash flow to maintain their operations,'' Mr Tanit stated.

''This has happened to every transport mode of service - a good example is the reported huge loss by the national carrier, Thai Airways.''

However, Mr Tanit said, it was possible that service charges would be cut slightly in the near future if fuel prices continue to fall.

But the drop would not be as much as the overall decline in fuel costs since operators are facing higher costs in other areas including maintenance, auto parts and labour, driven by higher inflation.

When diesel was at its peak, 53% of expenses in logistic services went to fuel, compared with 27% when diesel was at 33 baht.

Logistics cost account for an average of 5-6% of goods prices but the figure reached 8% when diesel costs hit their peak.

When logistic fees do start to decline, Mr Tanit said businesses that would benefit from eased costs would include producers of bulky but low-value goods such as textiles, agricultural goods and food products.

Paiboon Ponsuwanna, the chairman of the FTI's food industry club, said the food sector had not seen any reduction in its logistics costs yet.

''We know that logistics operators were not able to increase their charges when fuel costs were more expensive,'' Mr Paiboon said.

However, food processors realise that lower fuel prices alone cannot lead to reduced logistics charges.

He said the fuel cost pressures that had affected food production costs came largely from the farm sector and the use of fuel in producing and delivering raw materials, not from logistics operators handling finished goods.

While other fleet operators wait for an appropriate time to reduce charges, private bus operators are seeking a 42% reduction in operating fees collected by the state-owned Transport Co to 40 satang per kilometre from 57 baht now.

Pichet Jiamburaset, the Thai Bus Business Association president, held talks on the issue yesterday with the Land Transport Department.

The group represents 200 operators of private interprovincial buses. It said fuel price continued to hurt operators since they had not been allowed to raise fares.

During the past four months, the bus operators' fuel costs jumped to 38 baht a litre on average, but they were obliged to maintain fares based on an average fuel cost of 30 baht a litre.

Mr Pichet said that if oil prices continued to fall, operators would definitely reduce fares, but it would help if state support was available to delay fare hikes in the future if oil prices rebound.