Diesel prices have reached record highs as the 2026 Iran war continues, and the ripple effects are already coursing through global supply chains. For trucking companies operating on thin margins, the cost shock is the latest variable in their operations. For shippers, higher fuel costs naturally translate into higher transportation expenses and consumers anticipate potential price increases on goods as a result. However, the impact is not uniform, as some carriers will absorb the blow while others face existential pressure. To understand how these fuel costs move through the supply chain and what comes next, we spoke with Dr. Chris Caplice, founder and director of the MIT FreightLab at the MIT Center for Transportation and Logistics.
Over the past several decades, the trucking industry has developed a sophisticated mechanism to handle fuel volatility. "Fuel prices have been managed separately from linehaul rates for decades," explains Dr. Caplice. "They are exceptionally volatile, so most shippers and carriers use a Fuel Surcharge Program where the risk of fuel costs is shared." These programs assume a baseline fuel efficiency and reimburse carriers accordingly, but the system creates winners and losers. Carriers with newer equipment benefit because their actual fuel efficiency exceeds what the surcharge program assumes. "Carriers with newer equipment will do better, as newer equipment has better fuel efficiency than the FSC program assumes," he notes. (....)