What Do the Strait of Hormuz, the Russia–Ukraine War and Paks Have in Common?
Three seemingly unrelated factors that can rewrite a logistics company’s future overnight—and one question that is becoming increasingly difficult to ignore.
These days’s headline: normal commercial shipping through the Strait of Hormuz has still not resumed. Along a maritime route that carries a significant share of the world’s oil supply in peacetime, only a handful of vessels are now passing through, compared with the previous 130–140 ships per day. In such circumstances, oil prices can rise dramatically almost overnight.
Meanwhile, the Russia–Ukraine war continues, creating persistent uncertainty around Europe’s energy supply. Electricity generation is not immune to unpredictable external conditions either. During prolonged droughts, periods of low river levels or unusually high water temperatures, some nuclear power plants may have to reduce their output because sufficient water at an appropriate temperature is not available for safe cooling. This is also a relevant risk in Hungary, as the Paks Nuclear Power Plant relies on water from the Danube for cooling.
But what connects all of these events?
The Strait of Hormuz, the Russia–Ukraine war and Paks may appear to be three entirely separate issues. In reality, they all highlight the same vulnerability: a logistics company’s operating costs can be influenced by geopolitical and environmental events over which it has no control.
The situation in the Strait of Hormuz affects the global supply and price of oil. The Russia–Ukraine war influences the security and cost of Europe’s energy supply. Droughts, low river levels and extreme heat can reduce available electricity generation capacity.
All three ultimately affect logistics companies in the same way: through more expensive and less predictable energy.
How Can We Plan for Years Ahead When Energy Prices Can Change Within Weeks?
Wars, closed trade routes, extreme weather, volatile oil and electricity prices, and unpredictable exchange rates have created a level of uncertainty in energy and fuel markets not seen for years.
A logistics company can still make a fleet investment intended to last for many years. It can purchase hundreds of diesel vans or invest in electric vehicles and the charging infrastructure required to operate them. In neither case, however, can it know with certainty how much that fleet will cost to run by the time the investment pays for itself.
Nobody can reliably predict the price of a litre of diesel or a kilowatt-hour of electricity five years from now. Nor can anyone foresee which new conflict, trade restriction, extreme weather event or regulatory change will rewrite today’s calculations.
A logistics company cannot influence when normal shipping will resume through the Strait of Hormuz, how long the Russia–Ukraine war will continue or how much water will flow through the Danube.
It can, however, decide how exposed its operations should be to these factors.
Diesel or Electric? Perhaps That Is Not the Most Important Question
The logistics industry often responds to energy-market uncertainty by replacing diesel vehicles with electric ones.
Electric vehicles have an important role to play in the transformation of urban logistics. They reduce local air pollution and, when powered by an appropriate energy mix, can also lower carbon emissions. But an electric van is still a van.
It still occupies road space, searches for parking, contributes to traffic, requires charging infrastructure and visits delivery addresses one by one. The vehicle’s powertrain has changed, but the underlying operating model has not.
Replacing a diesel fleet with an electric one does not eliminate exposure to energy markets either. Instead of depending primarily on oil prices, the company becomes increasingly dependent on electricity prices, grid capacity and the availability of charging infrastructure.
This does not necessarily remove energy-market exposure. To some extent, it simply shifts that exposure from one energy source to another.
In this environment, the most important question is therefore not whether a logistics company should purchase a diesel or an electric fleet.
The real question is how it can redesign its operations to require less energy, fewer dedicated vehicles and fewer unnecessary vehicle movements.
We Are Not Trying to Predict the Future Price of Energy
TOURMIX approaches the problem from a different direction.
We are not trying to predict whether diesel or electricity will be cheaper five years from now. We are reducing the amount of energy that needs to be used on the last mile in the first place.
Instead of replacing one uncertain energy source with another, we reduce the overall level of the delivery model’s exposure to energy markets.
Parcels are transported in bulk to a locker, collection point or urban consolidation location. From there, they are delivered by local people who are already travelling towards the recipient—on their way home from work or university, on foot, by bicycle or using public transport.
We do not organise a new vehicle movement around every individual parcel. We connect the parcel to a journey that is already taking place.
The difference may appear small at first, but it is fundamental.
In the traditional model, every additional address generates additional vehicle kilometres, energy consumption and costs. In the TOURMIX model, a significant share of the final delivery leg is incorporated into an existing journey. The parcel can therefore reach the recipient without requiring a dedicated van trip in every case.
Lower Energy-Market Exposure, More Resilient Operations
TOURMIX is not entirely independent of energy markets. The first stages of the parcel’s journey still require vehicles, warehouses and energy.
The difference lies in the degree of energy-market exposure.
If oil prices rise, fewer van-based address visits are affected by the increase. If electricity prices rise, there is a smaller dedicated electric fleet to charge. If grid or charging capacity becomes constrained, the final delivery stage is less dependent on that infrastructure.
This is not only an environmental advantage. It also provides direct business protection against:
fluctuations in fuel and electricity prices;
the high fixed costs of vehicle fleets;
the need to build charging infrastructure;
and unpredictable parcel volumes.
Logistics companies must deal with more than volatile energy prices. Parcel volumes are also difficult to forecast. A new van remains a fixed cost even when there are temporarily fewer parcels to deliver. During seasonal peaks, however, existing capacity can quickly become insufficient.
A community-based delivery model can respond more flexibly to changes in demand. Increasing capacity does not necessarily require the purchase of additional vehicles and the installation of new charging points every time volumes peak.
Using Less Energy Does Not Mean Offering Less Convenience
More efficient urban logistics should not require customers to give up home delivery.
TOURMIX aims to combine the efficiency of parcel lockers and collection points with the convenience of delivery to the door. Parcels can be taken onwards by local community couriers in the evening or at weekends, when traditional daytime courier routes are less aligned with recipients’ daily lives.
Fewer dedicated vehicle movements therefore do not necessarily mean a lower level of service. On the contrary, they can enable more personalised delivery that fits more naturally into customers’ routines.
So What Do the Strait of Hormuz, the Russia–Ukraine War and Paks Have in Common?
All three are factors beyond our control that can directly affect logistics costs through the price or availability of energy.
We cannot eliminate uncertainty. Nor can we guarantee the future price of oil, diesel or electricity.
What we can decide is how exposed urban delivery should be to those prices.
TOURMIX is not betting on which energy source will become the winner over the coming years. It is building a delivery model that requires less energy and fewer dedicated vehicle movements on the last mile in the first place.
We are not eliminating uncertainty in energy markets. We are reducing the degree to which our operations are exposed to it.
