Risks and Preparedness in Transportation
In recent weeks, government measures affecting the domestic fuel market and the partial release of strategic reserves have once again brought attention to the sustainability of Hungary’s price-protected fuel system and its potential market consequences.
Our company considers it important to provide our partners with objective and professional information about expected developments, as fluctuations in fuel costs have a direct impact on the entire road freight transport and logistics sector.
Currently, Hungary’s protected price levels are as follows:
95 petrol: 595 HUF/liter
Diesel: 615 HUF/liter
By contrast, market price levels are currently significantly higher:
95 petrol market price: approximately 641 HUF/liter
Diesel market price: approximately 661 HUF/liter
The difference is particularly significant for diesel, which is the primary energy source for road freight transport. A potential removal of the price cap could result in a cost increase of 180–200 HUF/liter compared to the current protected price level within a short period.
In road freight transport, fuel costs account for an average of 30–40% of total operating costs, and in international operations, sometimes at even higher rates. The transition to current market prices would therefore likely result in 8–15% upward pressure on general freight rates in the market, particularly for long-distance and international transport operations.
It is important to emphasize that the road freight sector has already been forced to manage significant cost increases in recent months:
continuously rising wage costs,
increases in road tolls,
rising financing costs,
increasing maintenance and parts prices,
as well as unfavorable developments in currency exchange rates.
Nevertheless, road freight operators are doing everything possible to maintain current rate levels for their partners for as long as possible and to minimize the direct pass-through of cost increases. However, in the case of a persistently higher fuel price environment, operating costs could increase to such an extent that rate corrections may become unavoidable in the longer term.
In recent months, the Hungarian government has decided on several occasions to release strategic reserves in order to ensure continuous supply at the protected prices.
According to Portfolio information, a total of 150 million liters of petrol and 425 million liters of diesel have been released from strategic reserves.
Industry players and professional organizations, however, are increasingly signaling that the current system may pose serious supply security risks in the longer term.
According to data presented by Agroinform, domestic fuel stock levels have declined significantly in recent months. Based on expert assessments, the reduction in imports due to the price cap and the increased consumption together create market distortions that, if sustained, could lead to supply problems.
According to HVG analyses, the use of strategic reserves currently temporarily stabilizes the market; however, in the longer term, it does not represent a sustainable solution, particularly given rising global oil prices and geopolitical uncertainties.
A particularly important risk factor is the communication of a potential price cap removal.
If the government were to announce such a measure with significant advance notice, this would likely trigger an immediate market reaction. Based on previous domestic and international experience, such circumstances could trigger significant consumer stockpiling within a short period, potentially leading to local or even nationwide fuel shortages.
Based on industry expectations, it is therefore probable that between the announcement of a potential price cap removal and its implementation, there would be minimal time, likely only a few hours or at most 1–2 days. This would primarily serve to maintain supply security.
In the coming period, the risk of further fuel price increases remains. The main causes are:
the high global market price of Brent crude oil,
volatility in the forint exchange rate,
the tightening supply in the European diesel market,
geopolitical tensions in the Middle East,
as well as the significant costs of replenishing strategic reserves at a later date.
According to Portfolio and several energy experts, the government can maintain the current system as long as supply security indicators and international price levels permit, however, the final decision is likely to be determined by developments in global oil prices and domestic fuel stock levels.
Our company continuously monitors domestic and international energy market developments in order to provide our partners with the most stable and predictable service conditions possible.
