U.S. on-highway diesel averaged $6.179 a gallon last week, down two cents from $6.382 in the week of Sept. 28, but still more than $2.50 above year-ago levels. The International Energy Agency warned Tuesday that constrained diesel supplies could persist well into 2027, as counter-seasonal stock draws and restricted production collide with peak winter demand. September refining margins hit a record near $95 a barrel after attacks linked to the Iran war slashed refining capacity.

The two-cent weekly decline, reported by the U.S. Energy Information Administration, offers shippers only modest relief. For Jim Horrigan, an expert partner at Bain & Company with more than 30 years in procurement and sourcing consulting, the message is to stop waiting for prices to normalize.

"You can't do much about diesel prices, but you can work on focusing on the controllable expenses within freight," Horrigan told Sourcing Journal.

In a report published Oct. 1 with Spencer Shute, a vice president at Bain-owned Proxima, Horrigan laid out four moves that freight-intensive companies are making now. Fuel accounts for an estimated 25 to 30 percent of trucking operating costs, up from about 21 percent in 2024, according to Bain. A shipper spending $50 million a year on truckload base rates faces a surcharge swing alone that adds $2 million to $4.5 million to the annual bill.

Why are surcharges the first target?

The Q4 TD Cowen/AFS Freight Index, released Tuesday, found parcel fuel surcharges have largely stopped moving in line with the pump. Carriers now use them more as a pricing lever than a cost pass-through.

The numbers show the gap. Diesel rose from an average of $2.91 a gallon in the first quarter of 2021 to $6.53 this September. The average parcel fuel surcharge climbed from 7.75 percent to 30 percent over the same period. AFS calculates that 72 percent of the 22.25-point increase came from carriers rewriting their surcharge schedules, not from higher diesel prices. Even if diesel fell back to $2.91, the surcharge would stand at 23.75 percent — roughly triple the 2021 level.

Bain's report offers its own illustration. UPS raised its fuel surcharge from 21 percent before the conflict with Iran to 29.5 percent as of Sept. 21, then adjusted the mechanism so rates decline more gradually as diesel prices fall.

Bain recommends shippers establish their own surcharge schedules in carrier contracts, pegged to the EIA's weekly diesel prices, and negotiate limits on how often carriers' schedules change and how large adjustments can be. Horrigan described one consumer products client that "went back on their small package and put a cap in place," agreeing to review freight and fuel price increases only once a year at contract time. The point: costs that rise must also fall when diesel resets.

Carriers that have not yet renegotiated schedules will likely follow, the report says. J.B. Hunt offered a live example last month, warning that third-quarter earnings would fall 5 to 10 percent sequentially. Chief financial officer Brad Delco cited "some of the most radical and abnormal swings in fuel prices" and a "mismatch, based upon the delay part of pricing, that we see in intermodal relative to the costs we're feeling now."

Does rail still pencil out?

The second move is shifting eligible freight to rail, which costs significantly less per mile than truckload. Horrigan cautioned that a late train can spoil the economics. He pointed to a tier-one automotive client weighing a rail shift on lanes where it can build inventory buffers to absorb the uncertainty.

J.B. Hunt's intermodal business has already benefited. The carrier posted its first double-digit volume-growth quarter in more than a decade in the second quarter, with management linking the growth to mode conversion as truck pricing became less attractive.

Where else can shippers cut?

Better execution can cut wasted miles and fuel consumption. Horrigan urged shippers to reduce empty miles, cut idle time and redesign networks to shorten shipping lanes. He cited delivery windows and drop-trailer programs, long used by home improvement retailers, as ways to cut idle time at loading docks.

"Does it have to be next day, or can it be two day?" Horrigan asked, urging shippers to question service levels. "No one's going to come out with a new fuel-efficient truck and change out a fleet in the short term," he said.

The fourth move: manage inbound freight with the same rigor as outbound. Horrigan said procurement teams need visibility into the freight component of supplier pricing, because suppliers use fuel costs as cover for broader price increases.

"Suppliers come to procurement and say, 'Hey, we need a price increase because of freight,'" said Horrigan. "They use it as an excuse to grab at that opportunity to raise prices due to freight cost increases."

Once freight cost is visible, a company can decide whether the supplier keeps handling it or takes control itself. That visibility also opens savings, since inbound shipments can pair with outbound ones into round trips rather than empty backhauls. "Carriers love that because they don't want to run out empty," Horrigan said. "It just burns fuel without generating revenue."

With the IEA projecting tight diesel supply into 2027 and refining margins at record highs, shippers that renegotiate surcharge mechanics and rework freight networks now will enter the next contract cycle with costs they control rather than costs that control them.