The global trade landscape is currently undergoing a massive shift, with current fuel price volatility and new mandatory emissions reporting in Australia. Despite the barrier to entry for e-commerce being lower than ever, sourcing and logistics are where the ‘real’ battle for profitability is.
Petrol prices in Australia have reached a record high, averaging of $2.38 a litre. The situation is only expected to worsen as the government and Australian fuel importers are scrambling to secure shipments of replacement fuel, which is why businesses, particularly smaller businesses, will have to rethink how they manage their own freight.
Home businesses should tap into the power of dedicated import and export companies, like JTC Import Export, to secure licensed goods and stock at discounted prices. As fuel prices worsen and Australia introduces new mandatory emissions reporting, wholesale retailers that can share the load with sourcing and logistics will be crucial for success.
The Current State of Fuel Prices
The ongoing fuel crisis is having a significant impact on businesses and logistics across the country. Australia is currently experiencing the largest rise in fuel prices in the developed world since the start of the Iran War.
Prices for Unleaded 95 have risen 31.8% between February 23rd and March 16th, while Diesel has risen even more sharply, at 40.1%. This stark rise is having a massive impact on the transport industry, which is hurting businesses that require logistics.
ABC News reports that Australia’s transport industry has ‘hit a crisis point’ and is on the ‘brink of collapse’ unless businesses can get urgent relief from fuel prices. Small businesses in regional Victoria are already reporting it’s the worst conditions since the COVID-19 pandemic.
Why Are Fuel Prices Skyrocketing?
The price of fuel is soaring due to the Iran war. The Strait of Hormuz borders Iran and has been effectively closed since the US and Israel attacked Iran on February 28th. This has caused the cost of crude oil to spike.
The Strait of Hormuz is a big shipping waterway that 20% to 25% of the world’s oil passes through. With the Strait of Hormuz being closed, the supply of petrol is limited, resulting in suppliers charging more and fuel prices rising.
With the volatile fuel prices, it’s now harder than ever for smaller businesses to manage their own freight. It’s now crucial for these smaller entities to partner with larger companies to handle import and export.
What This Means for Home Businesses
For home businesses, the rising fuel costs mean delivery, especially international freight, is going to be more expensive. This will significantly impact importing stock, fulfilling deliveries, and profit.
For businesses that want to stay afloat, shifting from a ‘Just-in-Time’ (JIT) model to a ‘Just-in-Case’ (JIC) inventory strategy is a must. A JIC strategy is common in regions where there is supply chain instability or unreliable infrastructure, which is what Australia is currently experiencing.
A Just-in-Time inventory strategy is where companies will try to minimise inventory costs by only stocking or producing goods after an order has come in. With the rising fuel costs causing instability to logistics, this model is unsustainable, especially for smaller businesses.
In contrast, a JIC strategy involves buying in bulk and maintaining large stock levels to avoid running out of products and to handle any unexpected events, like surges in demand. This strategy is ideal when the global trade landscape is hard to predict.
For home businesses, while the JIC strategy requires storage space and higher upfront costs, it can save you money in the long run. Buying stock in bulk now will protect you from any future price surges and minimise the risk of lost sales due to shortages.
Surviving as a Home Business
A range of support measures is being introduced to support small business owners navigating the global trade landscape and dealing with the rising cost of fuel and supply chain instability. These include interest-free loans, reduced and flexible tax obligations, fuel excise reduction, and free business advice.
The Federal Government’s Economic Resilience Program will be providing $1 billion in interest-free loans to fuel, fertiliser, and other critical supply chain businesses.
The Australian Government has also reduced the fuel excise on petrol and diesel by 32 cents per litre until the 30th of June 2026. State governments, such as Western Australia, are also offering free financial advice to small businesses to help plan for continuity.
For home businesses impacted by the rising fuel costs, a few tips include:
- Use apps such as FuelCheck and PetrolSpy to find the best prices on fuel
- Consider increasing costs on products to adjust for the rising fuel costs
- Bulk order stock to save on delivery and import fees
- Consider financial planning to strategise for any unforeseen circumstances
Bulk ordering stock and following a JIC strategy will ensure you can still meet demand and ship a high volume of orders, even when the market is unstable.
ATO’s Fuel Response Payment Plan
For home businesses impacted by the rising fuel costs, the Australian Tax Office (ATO) has devised a fuel response payment plan. This payment plan is available by application for eligible taxpayers until the 30th of June 2026.
This payment plan is for businesses that are experiencing financial difficulty due to higher fuel costs. Conditions for the payment plan include no upfront payment, a 3-year payment plan period of 36 equal monthly instalments, and general interest charge remission.
This is currently the Australian government’s first step in supporting business owners. They promise to further assess the fuel situation and provide support options where possible.
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