Strategies Employed by Cross-Border Traders to Mitigate the Adverse Effects of Fuel Price Volatility

Abstract

Fuel price volatility represents a major economic challenge for transport-dependent enterprises in developing economies. This study explores strategies employed by cross - boarder traders to mitigate the adverse effects of fuel price volatility. The study employed a mixed-methods approach using a concurrent triangulation design, combining quantitative data from structured questionnaires administered to 101 traders with qualitative interviews to capture experiential insights. Quantitative findings reveal that fuel price fluctuations significantly increase operational costs and reduce profitability. Approximately 68% of respondents reported that fuel price changes have a very significant effect on transportation costs, while fuel-related expenses accounted for about 10–20% of total operational costs for most traders. Regression analysis confirmed a strong relationship between fuel price fluctuations and trader performance, with fuel price volatility significantly increasing operational costs (β = 0.72, p < 0.001, R² = 0.52) and negatively affecting profitability (β = −0.65, p < 0.001, R² = 0.48). Qualitative findings reveal that traders frequently adjust pricing structures, transport routes, and delivery schedules to manage rising fuel costs. The study concludes that fuel price volatility poses a substantial constraint on cross-border trade performance by increasing operational uncertainty and reducing profit margins. The findings highlight the need for policy interventions and institutional support mechanisms to enhance the resilience of small-scale traders operating within fuel-dependent trade systems.