Gasoline prices fall alone.

Over the past three months since July 7th, when the retail price of A92 gasoline peaked at 25,640 VND/liter, the price has decreased eight times consecutively, totaling a reduction of 3,300 VND/liter.

Gasoline prices have dropped sharply, but transportation costs remain unchanged (photo taken at Thu Duc wholesale agricultural market, Ho Chi Minh City) - Photo: T.Long

However, what is puzzling is that many services and goods that previously capitalized on this product remain unaffected.

Previously, when fuel prices rose, businesses would quickly increase prices, citing losses. Now that fuel prices have fallen, their reaction seems much slower, with reasons shifting to areas other than fuel costs.

"The drop in oil prices hasn't been enough to lower transportation costs."

"Gasoline prices have dropped several times, but it only adds up to a few thousand dong, which isn't much," most independent truck drivers in Ho Chi Minh City quote prices the same as they did before the price reduction.

According to them, the need to adhere to load limits and fierce competition among trucking companies have driven prices down to rock bottom, and if there are any reductions, only large companies operating very long and frequent routes will likely benefit significantly from the eight consecutive fuel price drops recently.

However, long-distance carriers do not consider the recent significant drop in fuel prices as a substantial incentive to reduce freight rates.

Toan Nhat Transport and Logistics Company Limited (Go Vap District, Ho Chi Minh City) is still maintaining the same freight rates as a few months ago, when gasoline prices were at their peak.

Accordingly, the road freight rate for a shipment of approximately 10 tons from Ho Chi Minh City to Hanoi, for heavy goods, remains at around 3.5 million VND per ton.

Mr. Nguyen Van Quan, deputy director of Toan Nhat Company, said that current transportation costs are mainly influenced by carrying loads within the limits stipulated by the State.

In addition, airlines mainly adjust prices based on the general market, looking at the prices of competing airlines to win customers rather than calculating the fluctuations in fuel prices.

Mr. Quan also acknowledged that in previous price adjustments based on fuel prices, transportation companies mainly increased fares when fuel prices rose and generally did not lower them when fuel prices fell.

The general situation among transportation companies is similar; they all charge customers transportation fares as if fuel prices had never dropped eight times.

"A slight decrease in fuel prices is insignificant compared to the increase in a host of input costs, especially when we have to carry the correct load weight instead of overloading as before," explains transportation companies, although most of them acknowledge that fuel accounts for 40-60% of total transportation costs.

This trend contrasts with the reaction of transport businesses during previous fuel price increases. Back then, transport businesses quickly claimed losses, making calculations that revenue was insufficient to cover expenses, paving the way for the final move of raising transport fares.

"When we asked for a reduction in freight rates in line with the drop in fuel prices, our partners all said that business is too difficult these days, and sometimes they have to accept losses when transporting goods. A slight decrease in fuel prices would only make things a little easier. So, we had no choice but to accept it," said Pham Hong Ha, director of Hong Ha Construction Company in Go Vap District.

Gasoline prices have dropped eight times, but taxi fares remain unchanged - Photo: T. Phung, N. Khanh - Graphics: N. Khanh

Taxis haven't considered lowering their fares yet.

Although unaffected by the new regulations on load limits, taxi companies in Ho Chi Minh City are not yet considering lowering prices. The price for the first kilometer in a seven-seater Vinasun taxi remains at 18,500 VND for journeys under 30km.

For longer routes, taxi companies still quote the same prices, without any reduction. When asked about the price from Ho Chi Minh City to Vung Tau via the 110km expressway through Cat Lai (District 2, Ho Chi Minh City), Vinasun Taxi quoted a one-way price of 1,420,000 VND for a vehicle with air conditioning.

This price excludes toll fees, and an additional 12,000 VND is charged per kilometer if the distance is exceeded. Therefore, both short-distance and long-distance fares, as well as the surcharge for exceeding the toll, remain unchanged compared to the period before the fuel price reduction.

According to Mr. Ta Long Hy, chairman of the Ho Chi Minh City Taxi Association, taxi fares of most companies have remained at the same level as at the end of 2013 until now, unchanged despite several significant increases in fuel prices in the first half of 2014.

Except for a few manufacturers who adjust prices for certain specific models.

"Recently, they've said that fuel prices have decreased 7-8 times, but the actual reduction isn't that significant, and if you offset it against the increases, the difference is insignificant enough to adjust taxi fares," Mr. Hy explained.

Goods remain at the same price.

Although fuel is a crucial input in cost accounting, construction companies are overlooking the fact that fuel prices have been falling for the past eight rounds, a fact that has been widely publicized.

A representative from Nha Vui Construction and Architecture Company in Tan Phu District, Ho Chi Minh City, stated that, like many businesses in the same industry, they have not yet considered adjusting construction unit prices when fuel prices fall, even though this input cost accounts for a significant portion of the total cost of civil construction, from pile driving, excavators, cranes, concrete mixers, compactors, etc.

"Hearing about the drop in fuel prices is just an internal matter, something to be happy about for a little while, as a way to save on costs. The prices are mainly based on the general market rate in the industry. Moreover, construction unit prices depend more on labor costs and building materials," this person explained.

A survey of several building material stores in Ho Chi Minh City shows that the general trend remains "maintaining stable prices as before."

Mr. Nguyen Ba Chung, head of sales at Song Phuong Construction and Trading Service Co., Ltd. (Tay Thanh Street, Ho Chi Minh City), said that the prices of key commodities such as cement and steel remain unchanged from a few months ago, when gasoline and oil prices were still high.

For example, the price of Pomina rebar (6mm diameter) remains at 14,450 VND/kg. “Fuel prices also have an impact, but these commodities are mainly affected by the need to transport them at the correct load capacity. Therefore, prices haven't changed compared to a few months ago,” Mr. Chung stated.

Earlier on July 23, Pomina Steel Company announced a price increase of 100,000 VND/ton for steel, raising the selling price in Ho Chi Minh City to approximately 14.9 million VND/ton. This was the second price increase since the beginning of 2014.

In that price increase, the company stated that the main reason was the rise in gasoline prices, which increased transportation costs, thus requiring a corresponding adjustment in selling prices.

According to what I read in the newspaper.