Record Diesel, Slower Suppliers: Protect Landed Cost

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Freight used to be a line item most plant managers could leave to the logistics team. Not this fall. Diesel hit an all-time high in September, a major carrier warned on profits, and suppliers keep taking longer to deliver. Each of those shows up in your landed cost and in how much inventory you need to carry.

Here is what the latest data says, and how to respond without simply piling up stock.

Diesel: record prices and fast swings

The national average for diesel reached $6.31 a gallon on September 16, an all-time high according to AAA, Quartz reported. That is more than 70% above a year earlier. Diesel stood at $3.76 when the Iran war began in late February. The report links the rise to restricted tanker traffic through the Strait of Hormuz and Russia’s ban on diesel exports.

Carriers feel the swings as much as the level. J.B. Hunt told investors that third-quarter earnings per share could fall 5% to 10% from the second quarter, FreightWaves reported. It cited at least a $10 million fuel headwind and about $25 million in extra driver-related costs. Fuel surcharges run on a one-week lag, so fast price jumps hit before they are billed. Management also said truck capacity is “not letting up,” which points to firm rates into peak season.

One useful detail for shippers: SONAR data cited in the same report showed intermodal running 32% cheaper than truck, a wider gap than usual. If you move full loads over long distances on flexible schedules, it is worth asking the question.

Ocean: transpacific firm, other lanes softening

On ocean freight, Drewry’s World Container Index for October 1 stood at $4,434 per 40-foot container, down 1%. Shanghai to Los Angeles held at $7,835 and Shanghai to New York rose 1% to $10,428. Asia-Europe rates have now fallen 12 weeks in a row, helped by more Suez Canal transits. Drewry expects rates to dip during China’s Golden Week holiday but describes the market as volatile.

There is also a policy risk on the water. The suspension of US fees on China-linked vessels runs out on November 9 unless USTR extends it, Supply Chain Dive reported. If the fees return, carrier surcharges could follow.

Suppliers are slower, and inventories are thin

The ISM September survey shows supplier deliveries slowing for the tenth straight month. In the survey, 21.4% of respondents reported slower deliveries and only 3.4% faster, according to Haver Analytics. At the same time, the Inventories Index fell to 48.6, back in contraction. Customers’ inventories were rated “too low” at 41.6, Manufacturing Dive reported.

That combination is uncomfortable. Lead times are longer and less predictable, customers are lean, and input prices are rising. The tempting response is to buy more of everything.

The working capital trap

Many companies already did that. The Hackett Group’s latest working capital survey, covered by CFO.com, found that average days inventory at the 1,000 largest nonfinancial public companies it tracks rose to 56 days in 2025. Hackett linked the rise to stockpiling ahead of tariffs and supply bottlenecks. It also found that product-centric sectors saw their cash conversion cycle get worse, largely because of inventory build-ups. One Hackett principal described a shift from “just in time to just in case.”

Just in case is fine for a few critical parts. Applied to everything, it ties up cash you may need for higher freight, tariffs and wages.

A better way to buffer

The goal is targeted protection, not a blanket increase:

  • Recalculate safety stock using today’s lead times and lead-time variability, not last year’s averages.
  • Put the extra buffer on long-lead, single-source and high-margin parts. Let slow movers run down.
  • Split freight and fuel out of supplier and customer quotes so changes are visible, not buried in unit price.
  • Fill containers and trailers better before buying more capacity.
  • Check fuel surcharge tables in your carrier contracts, so you know how fast diesel changes reach your invoices.

What this means for your business

  1. Update landed cost for your top 20 purchased items with current freight and fuel. Use our free landed cost calculator.
  2. Re-run safety stock for critical items with the safety stock calculator, using real lead-time spread from the last six months.
  3. Track inventory turns by category every month with the inventory turnover calculator, and flag anything growing faster than sales.
  4. Before booking more containers, check how full your current ones are with the container load calculator.
  5. Ask your carriers or broker for an intermodal quote on your longest regular truck lanes.

If you want a structured look at freight, inventory and working capital together, our supply chain and operations services start with a free 30-minute call, and we agree the scope before any work starts.

Sources

This article summarizes public reporting and research as of October 5, 2026. It is general information, not legal, customs or tax advice.

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