'It’s really unfair': Delivery, ride-hailing drivers baulk at petrol duty hike

'It’s really unfair': Delivery, ride-hailing drivers baulk at petrol duty hike

Petrol station in Singapore Feb 16, 2021
A petrol station in Singapore on Feb 16, 2021. (Photo: Marcus Mark Ramos)

SINGAPORE: “I was shocked,” said courier Simon Har of his reaction on Tuesday (Feb 16) when he heard that petrol duties would be increased in Singapore with immediate effect.

On Tuesday, Deputy Prime Minister Heng Swee Keat announced during his Budget speech that petrol duty rates would be raised by 10 cents per litre for intermediate petrol, and 15 cents for premium petrol, as part of policymakers’ strategy to spur car-lite behaviour and address climate change. This is the first increase since 2015.

READ: Budget 2021: Petrol duty rates raised by up to 15 cents per litre

READ: Petrol duty rate hike: Tax rebates in Budget 2021 to ease transition to higher duties

Full-time delivery and ride-hailing drivers CNA spoke to said the petrol rate hike means they will have to shell out an extra S$60 to S$100 a month on costs. 

Mr Har, who has been a courier with logistics provider Lalamove for about a year and a half, said he is typically able to collect at least S$100 in revenue a day.

After deducting commissions to the company and trips to the petrol station - which he does every day - Mr Har said he is usually left with between half and three-quarters of that amount.

Petrol prices have also steadily climbed in the past 12 months, said Mr Har, eating further into the amount he is able to take home. The benchmark RBOB Gasoline went up from a 21-year low of U$S0.41 last March to US$1.79 on Wednesday, according to data from MarketWatch. 

Budget 2021 petrol duties and road tax rebates

Grab driver Raymond Leong said the news was too sudden. 

“I can understand and appreciate the argument (of going green) but it felt too abrupt even with the rebates,” he said, comparing the immediate petrol duty hike to the advance notice given for an impending hike in the Goods and Services Tax (GST).

“It’s really unfair,” said Mr Leong, who estimates he takes home between S$120 and S$240 a day as a full-time driver with Grab.

Mr Heng had announced in his Budget 2018 speech that the GST would be raised from 7 per cent currently to 9 per cent sometime between 2021 and 2025. He said in his latest Budget speech on Tuesday that this would now happen only between 2022 and 2025.

READ: Emerging stronger from COVID-19 crisis the focus of Budget 2021

WAIT AND SEE 

Ride-hailing and delivery providers said they will monitor the impact of the price hike on their drivers. 

Local ride-hailing startup Ryde said it might adjust incentives for its drivers or increase its base rate from the second quarter, depending on the data it receives, said founder and chief executive Terence Zou. The company, which has about 9,000 drivers, plans to keep its commission rate of 10 per cent “for the foreseeable future”, said Mr Zou. 

Grab said in a statement that it is “engaging all stakeholders to discuss the impact of this price increase on our driver- and delivery-partners,” while Deliveroo said it is “seeking to negotiate the best deals with fuel companies” for its 9,000 riders. 

Riders can also switch to other vehicles such as bicycles or deliver on foot, said a Deliveroo spokesperson, adding that the company will work with e-bike companies this year to offer discounts to their riders.

Foodpanda Singapore’s head of logistics Lim Zheng Gang said in a statement that more than a third of its fleet is currently made up of non-petrol vehicles such as e-bikes and bicycles, and there are incentives to encourage riders to use these eco-friendly rides. 

Foodpanda also has a partnership with Esso to provide fuel discounts to its riders, he added.

“Following the raise in petrol duties, we will reach out to the riders to determine the effects of the hike, and explore ways of managing the higher petrol fees if necessary”

READ: Budget 2021: Govt to review 'trajectory and level' of carbon tax; outcome at next year's Budget

Lalamove and Ninja Van declined to comment. 

Logistics player XDel, which has a fleet of 65 vehicles, estimates that the changes to pump prices will increase its fuel costs by around S$5,000 a month, or about 1 per cent of its monthly operational costs, said sales and marketing director Eddie Lee.

The company owns - and pays the fuel for - about one-third of its vehicles. The rest of the vehicles are owned by the drivers, who are responsible for their own petrol bills. 

Mr Lee said that he expects these drivers to ask for more pay to cover the higher petrol costs. His company will most likely absorb the additional expenses instead of raising delivery charges to remain competitive.

Mr Lee said the petrol price hikes did not come as a surprise, as the Government had raised petrol duties before to manage road traffic. “We just take it as part of running the business.” 

READ: Budget 2021: More incentives to encourage early adoption of electric vehicles

As for whether this would encourage the logistics and ride-hailing industry to go electric, both Mr Lee and the drivers said it would have to make economical sense first.

Charging points are still an uncommon sight, and even with the petrol duty hikes, said Mr Har, it still costs about S$10 more a day to rent an electric vehicle compared to petrol-engine cars.

On the other hand, Mr Zou said he has already seen a 10 to 20 per cent increase in hybrid vehicles in Ryde’s fleet in the past 12 months, and with this announcement, he expects the ratio to go up further. 

Source: CNA/rp(aj)

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