The Effects of Fuel Fluctuations

Apr 21, 2022International Logistics, Supply Chain Management

It’s no secret that gas prices are on the rise. The average consumer likely feels this impact every few days when they go to refuel their car. It can mean anything from a minor inconvenience to a change in lifestyle.

The logistics industry, however, is much more deeply impacted by these skyrocketing prices. From rising surcharges to massive diesel bills, the supply chain is straining under the weight of pricey fuel. This, in turn, heavily impacts markets across the globe.

Fuel Impacts on the Supply Chain

When the price for gas goes up, it’s logical that it would become more expensive to ship items. However, it’s important to remember that certain modes of transportation are affected more drastically by the price of diesel than others. Air freight, for example, uses a large amount of fuel, which is one of the reasons it’s often more expensive than other options. As prices for gasoline rise, so do rates for air freight.

Many shippers attempt to prepare for price fluctuations by instating fuel surcharges. Each carrier calculates these differently, but they’re normally based at least partially on the price of fuel the previous week. By working with a 3PL like TOC Logistics, it’s possible to negotiate this surcharge. Some carriers are willing to decrease or even waive the fee if an organization is willing to pay a higher overall rate. This can be beneficial for both the shipper and organization in the long run. The keys to negotiations like this are long-lasting relationships with the carriers, like the ones TOC Logistics has fostered over the years.

Higher Shipping Rates and the Economy

As fuel prices rise, so does the price of shipping, based on the surcharges and overall rates we described above. Since large amounts of a carrier’s budget go towards diesel (commonly between 20-40%, especially with air cargo), costs are magnified many times over when applied to a global fleet.

Once shipping becomes more expensive, organizations either need to take these financial hits or find ways to mitigate costs. Often, they are passed on to the next link in the supply chain—the purchaser or consumer. For supply chains with multiple links (like automotive or manufacturing, for example), this price can then be passed on, again, to the link below them, and so on. In the end, the costs of goods and materials rise, all as a reflection of the costs of shipping goods.

TOC Logistics is proud to have strong relationships with carriers across the globe. We use these to help negotiate rates for our customers and ensure their cargo arrives where it needs to, all at a cost that makes sense. Reach out to our team to learn more about how we can help.


Our capable and experienced team is standing by to assist organizations and supply chains across the globe. Click the button to get in touch with our team.

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