Oil price rise threatens Germany’s road haulage industry

Russia's invasion of Ukraine has sent oil prices rocketing, as supply is hit with impending import bans from various countries.

Brent crude oil, the international standard, is now trading comfortably over $100 a barrel. Last week there were wild price fluctuations, further increasing uncertainty.

It is causing major problems for consumers and industries that use a lot of diesel, such as Germany's logistics industry.

The Spokesman of the Board of the German Road Haulage, Logistics and Disposal Association, Dirk Engelhardt, says "The situation has never been as extreme as it is at the moment for medium-sized German transport firms. The extreme increases in fuel prices are a huge problem for our small and medium enterprises. They cannot pass on these prices quickly enough and are therefore acutely threatened with insolvency."

His industry was also suffering from labour shortages, as demand for goods rapidly increased after the initial wave of the pandemic subsided.

With Poland very much reliant on Ukrainian lorry drivers to fill its jobs, and Germany reliant on many Polish drivers to fill vacancies, a chain reaction has been created, which is likely to affect many European countries.

Thomas Uhrig is manager at logistics company Spedition Bork. He directly employs Polish truckers, and fears the effects of Ukrainian drivers returning home to fight will impact his business.

"We have about 240 Polish drivers;" he says. "Many Ukrainian drivers work in Poland and now they have to go back to their home country - either they are called up for military service or, of course, they want to save their homes. As a result, more trucker jobs are being advertised in Poland, which means there is a shortage of drivers in Poland. Due to this, Polish drivers are thinking about going back their home country and doing the job there."

On average a litre of diesel costs almost 57 cents more than it did about 2 weeks ago in Germany. As industries directly affected by the price hike start to raise their prices, there are fears that inflation may grow stronger, as other, relatively unaffected industries see their input costs grow.

As a result, many more consumers and businesses may feel the economic effects of the war in Ukraine.