How rising fuel prices are affecting Swiggy, Zomato's delivery fleet, Ola, Uber drivers

Rising fuel prices have hit the middle class hard - but those who have taken the worst beating are delivery executives and drivers, as they see their earnings get eaten away. 

It is 5 am, and Lokesh, one of the delivery staff for a food delivery platform, is already 10 minutes late. He is rushing to begin his work-day in a couple of hours. “I need to be ready, and in a place where there will be the most number of orders that come in,” he says.

Lokesh has one aim - to ensure he completes close to 35-40 orders by 1 am. That will ensure he makes between Rs 1,500 and Rs 2,000 a day so he can run his family of five, and also send money to his parents in the village. But it’s becoming increasingly tougher due to rising fuel prices. 

Murugan, a delivery person from Tamil Nadu, says it is difficult to make ends meet due to the increase in fuel prices. “To earn about Rs 1,000 a day, I work from 7 am to 11 pm. But the increase in petrol price is eating into my earnings.” 

Both Lokesh and Murugan work for the likes of Swiggy and Zomato.

On average, delivery personnel for these platforms would get about Rs 50 for every package delivered. Now, they make much less. 

The price of petrol in Bengaluru on April 30 was Rs 75.82 per litre; it is now Rs 83.13, an increase of around 9 percent. Similarly, in the case of diesel, which is the predominant fuel used by cab drivers, the price has risen to Rs 75.29 per litre from Rs 65.67 on April 30, a rise of 15 percent. 

Prices of petrol were deregulated in June 2010, while diesel prices were market-linked in October 2014. Of late, fuel prices in India have risen sharply tracking the movement in global rates.

Also read: Why success in Foodtech is about mastering logistics

A few companies like Chai Point have an electric bike fleet, but these are few and far in between. 

“Earlier, if I would fill my bike with fuel worth Rs 300, I would recover it quickly. I just needed to 15 to 17 deliveries in a day. That would get done by six or seven in the evening,” Lokesh explains. 

We have been speaking to delivery staff and cab drivers for a few weeks now, and realise that the macro factor of rising fuel prices is making it harder for these people to make money. 

Taking away the luxury of choice

Most of the delivery boys often pick or change who they deliver for based on earnings. Factors like how long they're stuck in traffic, typical types of tasks, etc matter. But increasingly the whole test and task of deciding to choose are dropping quickly.

The rising fuel prices don’t allow the luxury of choice any more. To top this, incentives have been steadily dropping. 

Rajashekhar, a driver with a cab-hailing aggregator, complains about the impact that fuel prices have had on his daily earnings. Giving an example, he says filling his car with Rs 2,000 worth of diesel gave him an income of Rs 7,000 on a weekly basis. This is down to Rs 5,000 for the same quantity of fuel now, almost a 28 percent drop in his weekly earnings.

Like many others, Rajashekhar does not have any other choice. This is his only source of income, and there are enough drivers around willing to ply their vehicles for cab aggregators. All he can do is hope fuel prices come down.

Hit, but not dead 

Despite this hit due to fuel price increase, it is unlikely that there will be any constraint in the supply of such blue-collar workers, especially with the ongoing festival season that will spill over to New Year’s.

QuikrJobs, a jobs platform for the blue-collar segment, states in a report, “This festive season, what’s interesting to note is that we saw a significant increase in the number of applications for delivery executives as compared to last year.”

The online platform saw an increase of 89 percent in applications for warehouse executives and a 120 percent spike in the number of applications for delivery executives in Q2 2018. 

In fact, a recent QuikrJobs report on the demand and supply of warehouse executives in India says that for every job added there are 70 candidates for the role across metros.

Also read: Why Uber Eats is hogging the limelight despite being late to the foodtech party

Working around changing dynamics

“While platforms like Ola and Uber, Zomato and Swiggy have created a gig economy, they aren’t able to create the same amount of income that these ‘entrepreneurs’ were promised,” says an analyst on the condition of anonymity. 

In the beginning, the drivers would make Rs 70,000 to even Rs 1 lakh even in a month, but soon the added charges of loan installments, parking, and commissions led to a drastic drop. 

The delivery boys now earn anything between Rs 18,000 and Rs 20,000 a month; this was at Rs 35,000 at its peak. 

“Though the drop in incentives and increase in the company commissions (Ola and Uber now allegedly charge 25 percent commission) might not hit earnings for drivers as they hustle their way through, macro factors like fuel prices definitely hit them hard,” another analyst says. 

"At the end of the day - rising fuel prices or not, we need to get the job done. There is no choice," says Lokesh.