Rising fuel prices have forced fleets to act

(JJ Gouin/Getty Images)

As diesel prices skyrocketed this year amid the U.S. military conflict with Iran, trucking fleets have relied on cost recovery strategies ranging from standard fuel surcharges to more sophisticated and dynamic planning tools to manage rising expenses.

At the same time, though, this pain at the pump has had an upside. It has helped whittle away at truck capacity, which in turn has contributed to much-needed freight rate increases.

Average U.S. retail diesel prices peaked at $5.64 per gallon in early April and have been over the $5 mark for much of the year, according to the U.S. Energy Information Administration.

Like other fleets, Nussbaum Transportation has felt the bite of this year’s high fuel prices. The truckload carrier’s weekly fuel costs increased from $430,000 in February to $590,000 by late March.

To lessen the impact, Nussbaum applies fuel surcharges to as much freight as possible, with more than 80% of its shipper relationships involving a surcharge, said Bill Wettstein, the company’s president, and Dustin Huber, its director of business analytics.

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Wettstein 

But fuel surcharges are an imperfect buffer against diesel price volatility.

Surcharges typically are based on EIA’s fuel prices from the week before, so as prices climb, fleets aren’t fully reimbursed at first. It eventually works out when prices fall and the surcharge lags a week in the other direction. But it did mean Nussbaum burned cash at first.

June, for instance, was a “really good month” for fuel expenses, but “March was terrible,” Wettstein said.

Steve Blough, chief supply chain strategist for software firm Infios, said fleets are shortening the gap between fuel cost increases and surcharge recovery by tightening surcharge language, narrowing adjustment windows, reviewing lane-level profitability more often and using more dynamic planning tools. Many carriers are specifying fuel indexes for specific lanes rather than using a single benchmark.

Nussbaum recently negotiated with one customer to use higher mid-Atlantic average fuel prices instead of the national average.

“It really is a case by case, and some of it is just dependent on how strong of a relationship we have with some of our shipper partners,” Huber said.

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Blough 

Blough said fleets are using more sophisticated planning tools to model fuel consumption by route. Analyzing a lane’s characteristics can help them better estimate trip costs and find a route’s most cost-effective refueling locations.

Looking ahead, artificial intelligence will help fleets anticipate fuel costs before a shipment occurs, Blough said. AI can analyze oil futures, refinery outages, seasonal demand, weather and world politics. It can produce confidence ranges rather than a specific forecast and continuously recalculate each shipment’s expected fuel cost until the movement is confirmed. And AI will improve its forecast accuracy over time.

“That final stage is where the industry is heading,” Blough said. “It transforms fuel management from a retrospective accounting exercise into a forward-looking execution capability. By combining AI with real-time operational data, organizations will be able to make smarter decisions about pricing, carrier selection, routing, procurement and profitability before costs are incurred — not after the fact.”

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Source: U.S. Energy Information Administration

For now, the fuel surcharges require communication and negotiation. When diesel prices spiked, Nussbaum quickly renegotiated rates with customers who had all-in rates without a fuel surcharge. Shippers generally have been agreeable.

Blough said shippers recognize that carriers must recover fuel costs, but they expect more transparency and consistency in how surcharges are applied. That’s especially so in a market driven by disruption rather than a fuel supply shortage.

“Contract terms are evolving toward clearer index references, shorter reset periods, lane-specific rules and stronger mechanisms for reviewing extraordinary surcharges during major disruptions,” Blough said.

Tightening capacity

Higher diesel prices have made it harder for fleets to operate older, less-efficient equipment, which has contributed to a steady reduction in industry capacity, said Tim Denoyer, vice president and senior analyst at ACT Research.

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Denoyer 

Capacity also has been tightened by tougher enforcement actions against noncompliant motor carriers, including stricter vetting of non-domiciled commercial driver licenses, shutting down inadequate driver training programs and removing electronic logging devices that enable tampering.

Denoyer said there has been a “breathtaking swing in the market balance.” Truckload spot rates are up roughly 40%-45% year over year — higher even than contract rates.

“This confluence of capacity constraints has led to just a really strong pricing environment, which was not the case six or seven months ago,” he said.

Nussbaum’s Wettstein, whose company began experiencing an upturn in February, said the freight recession “definitely feels like it’s over.”

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Leslie 

Even before the diesel price spike, fleets had already tightened effective capacity in 2025 by 5.5%, the largest amount since the pandemic, said Alex Leslie, senior research associate with the American Transportation Research Institute. Fleets reduced truck counts by 2.4% on average compared with 2024, and fleets parked about 10% of their trucks.

For shippers, fuel costs have become a secondary concern to getting a truck, Leslie said.

“We are experiencing a supply-side recovery to the freight market,” he said. “Not a demand-side recovery to the freight market. There’s not necessarily much more freight being moved.”

The freight recovery is still young, Leslie added. Furthermore, high operating costs mean that margins will be narrow even with improved rates.

Higher operating costs

Leslie, the lead author of ATRI’s 2026 update on the operational costs of trucking, said last year’s operating costs were the highest ever at $2.336 per mile. That number will rise in 2026, he said, based on the trends ATRI is tracking.

While less-than-truckload carriers had margins of 11.6% and tankers had margins of 4% in 2025, other sectors struggled. The truckload market had just a 0.4% profit margin, while the refrigerated market’s margin was 0.6% — both improvements from 2024. Flatbed carriers had an average operating loss of half a percent.

In this business environment, fleets must continue to manage their costs carefully.

“Fuel remains a mystery, and frankly, tariffs remain an uncertainty,” Leslie said.

Another option, though one not often used by trucking companies, is hedging — buying future diesel at a set price in order to have cost certainty.

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Marshall 

Matt Marshall, president of AEGIS and a commodity trading adviser, said a business must first determine its exposure. What can it pass on to customers through surcharges, and how much pain can customers absorb?

Marshall recommended that fleets consider how fuel prices would affect their profitability and their competitiveness rather than trying to predict the future.

Jeff LeMunyon, founder of fuel hedging adviser Linwood Capital, said hedging can provide businesses certainty as they budget.

LeMunyon doesn’t have trucking industry clients, but he does have clients in public transit. Hedging provides price certainty as they budget.

The higher fuel prices eventually will self-correct through market mechanisms, he said. Drilling has increased in the United States as energy companies pursue higher profits. The United Arab Emirates recently withdrew from the OPEC oil cartel and is increasing production.

“The cure to high oil prices is high oil prices,” LeMunyon said. “I wouldn’t be surprised, honestly, if we saw prices continue to grind lower, and maybe end up lower than where we started. A lot lower.”