Freight Shipping Costs Are Up. Here’s How to Mitigate Impact.

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Guest blog by Nick Brown, Rachel Karger, and Adam Hawtof of enVista

Current geopolitical disruptions are having a significant impact on global supply chains. Fuel costs have been fluctuating for months now, and they’re once again taking a sharp incline. According to the U.S. Energy Information Administration, as of July 27, 2026, the U.S. average on-highway diesel price was $5.3 per gallon, up $1.5 from the previous year.

Because nearly all modes of transportation depend on fuel, increased oil costs are driving up freight shipping costs across LTL parcel and intermodal, and it’s eroding margins for many shippers.

Why Fuel Costs are Up

The Strait of Hormuz is a critical route for global energy flows, and its periodic closures have put significant strain on the availability of oil. In its July 2026 market report, the International Energy Agency reported that global oil supply recovered to 98.8 million barrels per day in June as some flows resumed through the Strait. However, output remained 9.4 million barrels per day below pre-war levels.

It also reported that refined-product margins reached four-year highs in early July, even as crude prices decreased. This is why freight shippers are still seeing elevated diesel prices even when crude prices remain moderate. With so much fuel volatility, freight shippers can’t afford to build their response around one fuel-price forecast.

Transportation Actions that Mitigate Rising Fuel Costs

It’s not all bad news, though. There are both short- and long-term transportation shifts shippers can deploy to mitigate rising costs before it hits their bottom line. However, these shifts will require reassessing certain transportation decisions that were made in a different cost environment.

Many of these options, when costs are down, are deemed too slow or misaligned with service level initiatives. But when costs are up and urgency matters, these strategies can be some of the best methods shippers can use to reclaim margin. 

Short-Term Strategies to Reduce Transportation and Fuel Costs

For shippers that need to quickly recover fuel costs, here are some short-term cost saving strategies to consider.

Consolidate Shipments and Improve Equipment Utilization

When fuel prices are high, the goal should be to move larger volumes less frequently. This is one of the fastest ways to reduce fuel costs per shipment and get more utilization from your equipment.

Here are some specific transportation management tactics you can implement:

• Frequency reviews: Review order and shipment frequency to identify lanes where less-frequent, fuller shipments are possible.
• Shipment consolidation: Consolidate compatible orders and reduce partially utilized moves.
• Route optimization: Look for repeat origin-destination pairs, recurring underutilized shipments, and avoidable expedited freight.

As with any transportation decision, each of these strategies will come with its own tradeoffs. In order to move less larger shipments, shippers will likely need to hold higher inventory levels and accept longer lead time. Balancing the cost of increased inventory against transportation savings is the key to getting the most cost savings out of this strategy.

Reevaluate Modes

Modal shifts can be incredibly effective at reducing short-term transportation costs. Of course, they’re not universally beneficial, and the results of each shift will be highly dependent on lane, product, inventory positioning, and service commitment. Here’s some guidance on how to determine which modal shift may benefit your transportation network:

• LTL to truckload: When consolidated volume can fill enough capacity to improve unit economics
• Truckload to intermodal or rail: When lanes, lead times, and service requirements permit a slower but potentially more fuel-efficient mode
• Parcel to LTL: When order consolidation and shipment density support it
• Air to ocean: For international freight that doesn’t require expedited movement

To make the final decision, ask yourself questions like:

• Am I paying for speed on shipments where it’s not valued?
• Were any lanes excluded from intermodal because of assumptions that are no longer valid?
• Where would longer transit time require additional safety stock?
• Do the transportation savings outweigh the working-capital impact?

Reassess Service Level Agreements

It may be necessary to recover some costs by revisiting your service level agreements. Sometimes, increasing shipment lead times from just two days to three days can provide relief when fuel costs are high.

This strategy should not be treated as simply an opportunity to mine your business for areas to cut service levels. Instead, seek the areas where you’re paying for speed that doesn’t provide equal customer or business value

Start by segmenting your service by product necessity, order economics, geographic area, and contractual obligation. This can help you decide which orders can sustain a decreased service level, and which ones need to remain the same.

Review fuel surcharges, freight terms, and minimum-order policies

Many shippers are operating on fuel surcharge formulas that no longer reflect current costs or appropriate indexes. Others are absorbing costs that weren’t originally anticipated when agreements were established. Consider reviewing each of these areas and realigning where necessary. Here are some tactics you can implement:

• Consider transparent delivery charges for premium service
• Reevaluate minimum-order thresholds and free-freight policies
• Assess first-stop, multiple-stop, and special-handling charges
• Explain changes to customers in terms of service choice and cost transparency, not simply cost transfer

Some companies are already encouraging order consolidation, slow delivery promises, and implement delivery costs for fast shipments to share some of the fuel cost burden with their customers.

Reoptimize routes and network flows

Unoptimized routes are often the source of excess fuel costs. To recuperated these costs, rerun route and network analyses using current fuel, carrier, and service assumptions.

Here are some of the best ways to get cost savings out of your transportation network:

• Identify excess miles, inefficient stop sequences, fragmented routes, and imbalanced flows
• Review whether historic routing priorities still reflect current costs
• Combine deliveries, improve backhaul utilization, and reduce empty miles.
• Optimize at the network level rather than expecting each facility or transportation team to respond independently

Long-Term Strategies for Fuel Volatility

It’s also important to consider strategies that relieve costs in the long-term. For shippers looking to relieve current pressure while also implementing strategies that will support longer-term savings, consider these strategies:

Add a Network Node

If you find yourself shipping a lot of product over a long distance, it’s worth assessing whether your inventory is positioned close enough to demand. You may want to add a node closer to demand to reduce final mile exposure and enable faster service at a lower shipping cost.

Having more nodes may not automatically decrease your costs, but long-term, it can drive higher agility and cost-effectiveness in your supply chain down the line.

Consider Alternative Fuels and Equipment Strategies

Within the last decade, non-traditional fuel sources like electric or biodiesel fleets have expanded in both availability and range. While it may take time to reap the financial benefits, evaluating alternative fuel options by route profile, vehicle utilization, infrastructure, range, and total cost of ownership can provide a long-term path toward lower shipping costs.

Examine Fuel Hedging and Contractual Risk Mitigation

Some carriers may choose to leverage financial instruments to lock in long-term contracts. This is called fuel hedging, and it can help keep fuel costs more predictable even when geopolitical circumstances change. If you decide to take this route, make sure to consult qualified financial, legal, procurement, and treasury stakeholders to understand the risks, benefits, and regulations involved.

Use This Decision-Making Framework

Every change to your transportation network comes with its own tradeoffs. To make sure you choose the right strategies for your business, it’s important to consider every cause-and-effect scenario and determine which changes will have the largest net positive impact.

For each proposed change, here are some tradeoffs to consider:

Transportation costs

• Expected savings
• Implementation cost
• Cost per shipment or unit
• Exposure to fuel surcharges

Inventory and cash flow

• Additional safety stock
• Longer inventory dwell time
• Working-capital requirements
• Risk of stockouts or obsolescence

Service performance

• Transit-time impact
• OTIF exposure
• Customer commitments
• Expedite risk

Operational feasibility

• Carrier and mode availability
• Facility capacity
• Systems and data requirements
• Change-management effort
• Time to value

Build a Response that Can Adapt with the Market

Whether you opt for a short-term fix, a long-term solution, or a hybrid approach, the goal is to build a supply chain that’s agile against disruption. Not only will you reap much needed cost savings, but many organizations that implement these strategies also find environmental, social, and governance benefits, as reduction of shipment mileage, load count, or mode shift almost always translate to lower fuel consumption. As consumer preferences shift toward sustainable brands, organizations can leverage these improvements to strengthen their market positioning. 

If you’d like support from a transportation expert in determining which strategies will provide the most cost savings and overall value to your business, let’s have a conversation!

Let’s Have a Conversation.^®