How record diesel prices are reshaping UK supply chains

28 September saw average diesel prices reach a new peak at 199.18p per litre, edging past the previous record set in June 2022. Government weekly figures show how quickly the cost has risen: diesel averaged 164.52p per litre in mid July and 197.58p in the week beginning 28 September, an increase of just over 20% in eleven weeks.

By then, road freight operators were already dealing with a broader rise in costs. ONS figures show prices for transportation and storage services were 8.9% higher year on year in the second quarter of 2026, while Logistics UK reported that 69.5% of respondents had experienced higher transport costs since the first quarter. At that point, 79% expected fuel prices to rise further.

Wages, tyres, maintenance, insurance and other operating costs have all added pressure, leaving less room to absorb another sharp increase in diesel. Steve Blough, Chief Supply Chain Strategist at Infios, says exposure is determined as much by a company’s ability to respond as by the amount of fuel it consumes.

“The businesses most exposed aren’t simply those consuming the most fuel. They’re those with the least flexibility to adapt or recover the additional cost.

“Transport providers can absorb cost increases for a time, but sustained pressure eventually affects carrier margins, freight rates and fuel surcharges.”

Fuel surcharge mechanisms offer some protection in long haul road freight because charges can move against a published diesel index rather than leaving one side to absorb an unexpected increase for the duration of a contract. Fixed price work is more exposed, particularly where the operator pays more for fuel weeks or months before revised rates can be agreed with the customer.

Karin Strom, Vice President at global supply chain procurement consultancy Proxima, says surcharge mechanisms remain one of the more workable ways of sharing that risk.

“As diesel prices rise, the surcharge rises; when diesel prices fall, the surcharge falls. It prevents transport providers and customers from playing an expensive game of Russian roulette with the fuel market.”

Contracts without that protection have already come under strain. Strom says some transport providers have gone back to customers to renegotiate, while others have left work that no longer covers the cost of providing the service. Few hauliers, she adds, have enough margin to absorb prolonged fuel increases alongside higher wages, maintenance, tyres and lubricants.

Road Haulage Association research published earlier this year found only 10% of surveyed operators could pass fuel increases on in full, while 65% could recover them only partially. More than 40% reported being unable to recover some increases because of fixed contracts or customer resistance.

Higher diesel prices will also appear at different points in different supply chains. Stock already sitting in UK warehouses may have been sourced, shipped and distributed before the latest increase, while autumn replenishment and seasonal merchandise will increasingly reflect current freight charges.

Strom says much of the cost increase has yet to reach consumers because goods currently on sale were bought under a different cost environment. That changes as Halloween, Black Friday and Christmas stock moves through ports, warehouses and distribution networks, with current fuel surcharges and road freight rates attached.

Peak volumes expose the limits of cheap capacity

Seasonal demand will test more than fuel budgets. Department for Transport figures showed 26% of HGV businesses reporting driver vacancies in the final quarter of 2025, while Logistics UK found this summer that 44% of respondents with HGV operations did not have sufficient driving staff. The same research found 67.6% of domestic road freight users expected rates to increase during the third quarter.

Strom says carriers are becoming more selective about the volumes they commit to during the Christmas period, particularly where operators cannot simply add vehicles or drivers at short notice.

“The Christmas peak itself also looks unusually challenging. Capacity is becoming more constrained and many last-mile delivery providers are no longer offering unlimited collection volumes. Labour shortages, higher operating costs and continuing pressure on delivery networks mean carriers are becoming far more selective about the volumes they are prepared to commit to during peak periods.

“The golden rule of logistics remains alive and well: the cheapest freight option is usually the first to disappear when everyone suddenly needs it at the same time. Those who fail to plan ahead may find themselves graduating to premium services at premium prices.”

Retailers and manufacturers have several ways of dealing with higher transport bills, but none removes the cost. Some can absorb part of the increase, consolidate shipments, revise delivery thresholds or accept longer lead times. Others will renegotiate rates or pass costs further down the chain. The available options narrow as freight capacity becomes tighter and seasonal volumes rise.

Nishith Rastogi, Founder and CEO of logistics technology company Locus, says fuel increases can change the economics of individual routes and customer groups, particularly where delivery density is already low.

“Diesel is one of the most volatile costs in a transport network because even small changes at the pump are multiplied across every vehicle, route and delivery. For fleet operators and their customers, that makes the cost to serve far harder to predict and protect.

“When fuel costs rise, routes that were previously viable can become marginal. Operators have to make tighter decisions about vehicle allocation, route design, load consolidation and the cost of serving particular delivery areas or customer segments.”

Department for Transport figures for the twelve months to March 2026 show GB registered HGVs travelled 18.98 billion kilometres in the UK, including 5.71 billion kilometres while empty. Around 30% of total HGV distance therefore carried no load.

Some empty running is unavoidable. Trucks have to reposition between jobs, specialist trailers cannot always accept a return load, and the next suitable collection is rarely waiting beside the previous delivery point. Even so, almost one kilometre in three being travelled empty represents a substantial amount of diesel at close to £2 per litre.

Blough says companies are already paying closer attention to that part of the operation.

“Businesses are therefore looking more closely at where they can eliminate empty or unnecessary miles, improve vehicle utilisation, consolidate loads, reassess carriers and routes, and make better decisions about when and how goods move.

“When prices are rising this quickly, every mile, and every delay, matters.”

Ryan Yu, Vice President of Product at Samsara, says the frequency with which fleets review fuel performance is also changing.

“The behaviour change we’re seeing is how fuel is going from a monthly reconciliation to a weekly financial KPI.”

Idling, driving behaviour, refuelling location, route choice, vehicle age and load utilisation have always affected fuel consumption. The cost attached to poor performance has risen sharply since the summer, increasing the value of relatively small improvements across a large fleet.

A few percentage points removed from idling or empty mileage can matter when repeated across hundreds of vehicles, but there are limits to what better fleet management can achieve. Trucks still have to cover the distance between factories, warehouses and customers, and some routes remain commercially necessary even when they become less profitable.

Rastogi says higher delivery costs are already forcing businesses to examine replenishment and service decisions alongside transport.

“The impact does not stop with transport. Higher delivery costs put pressure on replenishment economics, inventory movements and retail margins. Businesses then face difficult trade-offs: absorb more cost, pass some of it through to customers, introduce delivery thresholds, or adjust service levels.”

Diesel prices revive the argument over distance

Once operators have reduced avoidable mileage and improved vehicle utilisation, attention shifts to the distances built into the network itself. Persistently expensive diesel changes the relative cost of sourcing locations, warehouse footprints and fulfilment models because each decision determines how far goods eventually travel by road.

Strom describes sustained fuel inflation as “a tax on distance”.

“Looking ahead, businesses are likely to ask tougher questions about where products are sourced, where inventory is positioned and how goods move through supply chains. Do parts really need to cross three countries before assembly? Does inventory need to sit on the other side of the world? Is there a regional supplier who suddenly looks more attractive?”

The answer will depend on more than mileage. A nearby supplier may charge more for a component. Additional stock held closer to customers can reduce urgent transport requirements but increase storage costs and tie up cash. Consolidating inventory into fewer sites may reduce warehouse costs while increasing delivery distance. Rail can remove road mileage from suitable trunk routes, but only where volumes, terminal access and service requirements allow it.

Blough argues that procurement, inventory, warehousing and transport costs need to be assessed together. Moving stock closer to customers may reduce one cost while increasing another, while changing mode can improve fuel exposure without necessarily improving lead times or service.

The UK’s reliance on imported diesel adds a further commercial consideration. Fuels Industry UK estimates that imports now meet around 55% of road diesel demand, compared with 14% in 2003. The government’s 2025 security of supply assessment had already found that domestic refineries met 54.9% of road diesel demand in 2024, with imports arriving from 28 trading partners.

A diverse supplier base limits dependence on any single country, but it does not insulate UK freight from refinery outages, export restrictions or disruption in international fuel markets. Reduced domestic refining capacity has made those overseas conditions more relevant to the cost base of British road haulage.

Blough says recent events have prompted companies to look more closely at fuel availability as well as price, alongside the more familiar risks attached to suppliers, inventory and transport capacity.

Replacing diesel remains difficult in heavy road freight. SMMT figures show only 90 of the 8,687 new HGVs registered in the second quarter of 2026 were zero emission models. Across the first half of the year, 171 zero emission HGVs were registered out of a total market of 18,158, leaving their share below 1%.

Light commercial vehicles are moving faster. Battery electric models accounted for 16.3% of van registrations in August, although the year-to-date share stood at 11%. Predictable routes, lower payloads and regular access to depot charging make vans better suited to current battery technology than many long haul HGV operations.

Strom says battery weight remains one of the barriers facing electric trucks.

“Large batteries are heavy. Heavy batteries reduce payload. Reduced payload reduces productivity and ultimately impacts economics.”

Alternative fuels, electric HGVs and charging infrastructure continue to develop, but diesel still performs a large part of the work required on long distance routes. Replacing that capability requires more than a change in vehicle procurement; charging, duty cycles, payload and network design all have to support the investment.

Yu says operators considering electrification should start with routes where the operating case can already be demonstrated rather than treating high diesel prices as sufficient reason for a fleet-wide replacement programme.

“Access to charging stations and improper route planning might not make sense for a fleet wide bet. Instead they should focus on efficient pilot programs along routes that will give the greatest return on investment.”

Rail, electric vehicles, alternative fuels and changes in supplier geography can each reduce diesel consumption in parts of a network, but road freight remains central to moving goods around the UK, and most HGVs entering service still run on diesel.

Contracts written when fuel was cheaper are now being tested against a very different market. Peak capacity is costing more, marginal routes are receiving closer attention, and inventory and sourcing decisions increasingly have a transport cost attached to them that looked very different three months ago.

Some responses can be made quickly. Hauliers can reduce idling, consolidate loads, renegotiate rates and review routes within weeks. Moving a warehouse, changing a supplier or replacing an HGV fleet takes years.

At 199.18p per litre, the immediate problem is the fuel bill. If prices remain high, more businesses will have to decide whether the distances, delivery commitments and sourcing patterns built into their existing supply chains still make commercial sense.