Freight is under pressure from almost every direction at the moment. Fuel, routing, capacity, geopolitical disruption, and carrier behaviour are all combining to make costs harder to predict and harder to control.
The most immediate issue we are seeing is fuel surcharges. These are not new, but the speed at which they are moving is significant. One example we have seen recently was a fuel surcharge of 8.9% in week nine of the year. By week 15, just six weeks later, it had risen to 25.4%. That is a major movement in a very short period of time.
And it is not confined to one type of transport. Every mode of transport is exposed to fuel. Road freight, pallet networks, sea freight, air freight and express carriers all feel the impact. We have recently seen examples of FedEx fuel surcharges at around 50%, and there is a lot of variation in how carriers calculate and apply these charges. The issue is not that every surcharge can be avoided. In the current market, some increases are real. If fuel has moved, routes are longer, or carriers are facing additional operational risk, then some level of surcharge may be justified.
But that does not mean every increase should simply be accepted.
The questions businesses should be asking are: is the surcharge reasonable? How is it being calculated? Is it linked to a transparent index? Is it being reviewed properly? And, just as importantly, when the market changes, will the surcharge come down as quickly as it went up? Suppliers are often very quick to put surcharges up, but potentially less keen when things come down. That is where the commercial risk sits. A temporary increase can quietly become part of the cost base if it is not being actively monitored.
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