The International Energy Agency (IEA) warned Tuesday that constrained diesel supplies could persist well into 2027, and Bain & Company is telling freight-intensive shippers to stop waiting for prices to normalize — because the numbers say they won't, and carriers have already reset the game in their favor.

The IEA's monthly oil market report cited counter-seasonal stock draws and restricted production colliding with peak winter demand. It landed the same day U.S. Energy Information Administration (EIA) data showed the national average on-highway diesel price falling for a second straight week, to $6.179 a gallon — a two-cent decline from $6.382 in the week of Sept. 28. That's modest relief. Diesel still sits more than $2.50 a gallon above year-ago levels, and September refining margins hit a record near $95 a barrel after attacks linked to the Iran war slashed refining capacity.

For apparel and soft goods shippers, the exposure is now structural. Fuel accounts for an estimated 25 to 30 percent of trucking operating costs, up from about 21 percent in 2024, according to Bain. A shipper spending $50 million a year on truckload base rates faces $2 million to $4.5 million added to the annual bill from the surcharge swing alone.

What did Bain actually recommend?

Jim Horrigan, an expert partner at Bain with more than 30 years in procurement and sourcing consulting, published a playbook Oct. 1 with Spencer Shute, a vice president at Bain-owned Proxima. Four moves, all already visible in client behavior.

• Own the fuel surcharge schedule. Peg surcharges in carrier contracts to the EIA's weekly diesel prices, and negotiate limits on how often and how far carriers can adjust them. Horrigan described a consumer products company that "went back on their small package and put a cap in place," reviewing freight and fuel increases only once a year at contract time.
• Shift eligible freight to rail, which costs significantly less per mile than truckload — with the caveat that a late train can spoil the economics. A tier-one automotive client is weighing a rail shift on lanes where it can build inventory buffers.
• Cut waste. "No one's going to come out with a new fuel-efficient truck and change out a fleet in the short term," Horrigan said. "Reduce empty miles, reduce idle time, improve your network design." He also pointed to delivery windows and drop-trailer programs (trailers left at a dock for loading outside peak hours) long used by home improvement retailers.
• Manage inbound freight like outbound. Suppliers citing freight to justify price increases need visibility from procurement teams. "They use it as an excuse to grab at that opportunity to raise prices," Horrigan said. Once freight costs are visible, inbound and outbound shipments can be matched into round trips instead of empty backhauls — "Carriers love that," he added.

Why are surcharges the pressure point?

The Q4 TD Cowen/AFS Freight Index, released Tuesday, shows parcel fuel surcharges have largely stopped tracking the pump — carriers now use them as a pricing lever, not a cost pass-through.

The arithmetic is stark. Diesel rose from an average of $2.91 a gallon in Q1 2021 to $6.53 this September, while the average parcel fuel surcharge climbed from 7.75 percent to 30 percent. AFS calculates 72 percent of that 22.25-point increase came from carriers rewriting surcharge schedules, not higher diesel. Even if diesel fell back to $2.91, the surcharge would stand at 23.75 percent — roughly triple the 2021 level.

Bain's report offers its own example: UPS raised its fuel surcharge from 21 percent before the Iran conflict to 29.5 percent as of Sept. 21, then adjusted the mechanism so rates decline more gradually as diesel falls. Carriers that haven't renegotiated yet will likely follow, the report says. J.B. Hunt provided a live illustration last month, warning Q3 earnings would fall 5 to 10 percent sequentially, with CFO Brad Delco citing "some of the most radical and abnormal swings in fuel prices" and a pricing mismatch in intermodal versus current costs.

Mode conversion is already moving volumes. J.B. Hunt's intermodal unit posted its first double-digit volume-growth quarter in more than a decade in Q2, with management crediting truck pricing becoming less attractive.

The sourcing decision this forces: audit your carrier surcharge mechanics and supplier freight pass-throughs now, because the IEA's timeline gives you through 2027 — and the pricing resets won't unwind on their own.