Key Points
- Fuel contracts built on index averaging fail when the spike has duration. The strategic response isn't to ship less, it's to ship differently.
- Three mitigation levers currently exist: non-indexed fuel strategies, load consolidation, and modal optimization. None eliminates the exposure, but each reduces it in measurable ways.
- Consolidation has an inventory carrying-cost trade-off that's worth calculating explicitly. Shippers who run that math make better decisions than those who don't.
- The frequency of these decisions needs to increase. Weekly, not monthly. That's only possible if your charge-level data is accessible and up to date.
Someone said something in a webinar we did a few weeks ago that I keep coming back to. The point was simple: if your boss asks why transportation costs are up and your answer is "we should sell less," you'd be fired.
Obviously. You still need to move product. Business isn't stopping. The shippers I've been meeting with recently are largely bullish on their growth strategies. They're expanding product lines, they're investing, they're not sitting still. The question on the table isn't whether to ship. It's how to do it without getting crushed by a fuel environment that, as of late May, shows no signs of resolving.
National diesel crossed $5.65 per gallon at the start of April. That's up from $4.92 in March and $3.72 in February. It hasn't been at these levels since mid-2022. And unlike the last time we were here, this isn't a demand shock. It's a routing and movement problem stemming from disruptions in the Strait of Hormuz. That distinction matters because demand shocks correct when demand corrects. Infrastructure and geopolitical disruptions correct on a different timeline, one that nobody in this market controls.
So what do you actually do about it?
The Three Levers, Explained Honestly
There are three mitigation strategies worth taking seriously right now. I want to be clear up front: none of them makes the problem go away. Fuel is up 45% from pre-conflict levels. You're going to feel that. These strategies reduce how much of it lands on your P&L and require different levels of effort, lead time, and data to execute.
Lever 1: Non-Index Fuel Strategies
Most enterprise shippers are running index-based fuel programs. The fuel surcharge you pay tracks a national benchmark, typically the EIA weekly diesel average, and adjusts accordingly. In a stable market, that's fine. In a market with significant and persistent regional variation, it leaves money on the table.
West Coast diesel has been running well over $5.00 per gallon. Parts of the Midwest are materially lower. If you're running lanes exclusively in the Midwest but your surcharge is pegged to a national index that's weighted toward higher-cost regions, you're overpaying relative to your actual fuel exposure. The inverse is also true.
Non-index strategies let you tie fuel costs to regional actuals, specific lanes, or even specific routes. They require more granular data and greater negotiation discipline with your carriers, but the mechanics are in place. This isn't a theoretical option reserved for large carriers with proprietary fuel programs. It's a contracting decision, and it's available to shippers who know their actual lane-level fuel costs and can have that conversation with data to back them up.
The limitation here is honest: you're not eliminating the increase, you're getting more precise about how it applies to your specific network. In a 45% fuel spike environment, precision matters.
Lever 2: Load Consolidation
This is the one that has the most downstream implications, which is probably why it's underutilized. The core logic is straightforward. When fuel costs are high, the per-unit freight cost drops as loads get fuller. Shipping the same total volume in fewer, heavier shipments costs less per unit than shipping it in more frequent, lighter ones.
That's not a novel insight. What makes it complicated right now is the inventory tradeoff.
If you're going to consolidate loads, you need to either hold more inventory to batch orders or extend order cycles to let demand accumulate. Both of those have carrying costs: warehouse space, capital tied up in stock, insurance, and risk of obsolescence. Warehousing Prices are up 5.3 points to 72.7 on the LMI's April reading, so it's not as if storage is free. Warehousing Capacity has contracted to 45.5, the fastest rate of contraction since March 2024.
The math is actually runnable. Take your current fuel surcharge per shipment, multiply it by the reduction in shipment frequency a consolidation strategy would produce, and compare it to your incremental carrying cost for the additional inventory days you'd need to hold. For most shippers moving goods with reasonable shelf life and predictable demand patterns, consolidation wins. For shippers moving highly perishable, time-sensitive, or low-margin goods, it may not.
What I see too often is shippers skipping the math entirely and making the decision intuitively. Either they consolidate because someone told them to, without running the numbers, or they don't because it sounds operationally complicated. Neither approach is good enough in a market where fuel represents north of 21% of carrier cost per mile and that percentage is climbing.
Lever 3: Modal Optimization
This one is getting real traction right now because the numbers have moved enough to change the calculus on lanes where shippers previously defaulted to truckload.
Truckload spot rates are up 8.3% year-over-year as of January 2026. Intermodal rate increases for the same period are running in the low single digits. That's not a small gap. The LMI's Transportation Capacity reading of 28.4 is near an all-time low, indicating that over-the-road capacity is genuinely scarce and being priced accordingly. Intermodal, while not immune to the overall market, is seeing comparatively less acute tightening.
The sweet spot for intermodal is generally the 550- to 1,500-mile range. Freight that shifted back to truckload during the long freight downcycle of 2023 and 2024, when truckload was cheap and intermodal wasn't offering a meaningful discount, is beginning to shift back. If you have lanes within that distance range where your service requirements can accommodate the transit-time difference, it's worth running the comparison explicitly. The cost advantage is real and it's widening.
Air freight is also absorbing some ocean-to-air diversion from shippers dealing with the Suez Canal closure and Cape of Good Hope rerouting. That's pushing air freight PPI up 6.1 points year-over-year. If you're evaluating air as a mitigation for ocean disruption, factor that in. The relief valve is more expensive than it was a year ago.
The Part Nobody Wants to Talk About: Decision Frequency
Here's the reality I keep landing on. These strategies are not new. Experienced transportation managers are familiar with non-index fuel programs, consolidation, and modal optimization. The reason they're underutilized isn't ignorance. It's that running the analysis well requires current, charge-level data across your entire carrier base, and doing it at the frequency this market demands.
Two years ago, monthly was fine. Right now, you need to be looking at this weekly. The consolidation decision you make today based on current diesel prices could be the wrong decision in three weeks if prices shift, or if carrier capacity on a specific lane tightens further, or if a new surcharge structure gets introduced. These are not set-and-forget moves.
The shippers who are executing these strategies well have one thing in common: they can get the answer to "what is our actual fuel cost by lane, by carrier, by shipment type" without a two-week data extraction project. They made the investment at some point, before the market got this hard, in having their transportation spend data normalized, accessible, and current.
If you don't have that yet, the first move isn't to negotiate a new fuel strategy or redesign your consolidation model. It's to get the data in a state where you can run the math. Everything else follows from that.
Because the market isn't going to slow down while you figure out where your numbers live.
Steve Beda is Executive Vice President of Customer Advisory at Trax Technologies. This article draws on data from the April 2026 Logistics Managers' Index (Colorado State University / CSCMP), the U.S. Energy Information Administration, DAT Freight & Analytics, and Trax's monthly Freight Market Report.