Companies around the world are feeling the effects of rising fuel costs, especially retailers, distributors, carriers and logistics service providers. Diesel costs in May 2022 verses last year were up 65% in the U.S., 58% in Canada, 28% in Germany and 36% in the U.K.

Despite the challenges higher fuel costs bring to these industries, few companies have made significant efforts to address the issue. While fuel costs are normally cyclical, today’s prices are unlikely to resolve soon.

Fortunately, there are ways to mitigate the worst effects of the cost burden, and actions companies take now to reduce the impact of fuel costs can even reap benefits down the line when prices eventually relax.

Though demand is a large driver of oil prices, it’s far from the only contributing factor. Oil prices are set by the global market, and aren’t necessarily controlled by a single country. Additional factors include where the oil is sourced and refined and the fact that many grades require specific processing. 

The Russian invasion of Ukraine and subsequent government sanctions have disrupted global supply chains beyond the point of easy repair. Even if there is a cessation of hostilities, it’s unlikely that sanctions will be removed in the near future. Oil prices — and fuel prices — will thus continue to be elevated.

In order to address high fuel costs, the entire company needs to be involved in the solution, not just the transportation department. Following are 11 things you can do to alleviate the effects of rising fuel costs.

1. Implement a surcharge for incremental fuel costs. Often companies will have fuel surcharges already built into customer contracts. Don’t be afraid to use them. Apply surcharges to new purchases or renegotiate existing agreements. Customers may push back, but even a percentage of what was originally requested can make a big difference.
2. Implement dynamic service pricing. Customers who don’t want to pay more, may be willing to accept slower delivery estimates if it keeps their costs low. If they’re given a range of delivery pricing at the point of purchase, they can determine whether they want to choose premium delivery times or slower, lower-cost options. For those who want to pay less, choose slower transportation modes and longer delivery lead times. Delay shipments to consolidate multiple orders from the same customer or from several customers in the same region. Change TMS or route planning system optimization parameters to prioritize slower modes and shorter distances. This approach will make the delivery operation more productive, driving down fuel costs and driver hours.
3. Focus on driver performance. Drivers can use more fuel when idling or driving too fast. To reduce the fuel each trip takes, encourage drivers to reduce their speed, keep idling to a minimum and stay on well-paved roads when possible. 
4. Optimize vehicle performance. Conduct regular vehicle inspections to ensure that engines are tuned and tires are at the proper pressure to lower fuel consumption. Telematics solutions can also monitor the health of the vehicle as well as driving behavior. They can help fleet operations catch declining vehicle performance early and facilitate driver coaching to help drivers reduce their fuel consumption.
5. Challenge carrier fuel surcharges. Ensure that increases in carrier fuel charges are a direct result of their own increased fuel costs. Ask them to share the details behind the proposed increases so you can confirm the additional fees are necessary.
6. Collaborate with your carriers and customers. Increased fuel costs present an excellent opportunity to collaborate with other members of the supply chain. Together, you can identify practices, policies and operational conditions that decrease your collective fuel consumption. Ask for input from both your carriers and customers about how your business can reduce fuel consumption and lessen the burden of the increased costs.
7. Optimize your network. Over time, logistics networks can become suboptimal. This can happen when customers come and go, buying patterns change and new products join the market. Network optimization can take those changes and rebalance the logistics network to reduce fuel consumption. Focus on service policies, operational strategies and other “soft” considerations as opposed to bricks-and-mortar to deliver results more quickly—then go back and look at “hard” stuff for greater benefits. 
8. Rebid carrier contracts with a focus on fuel cost reduction. In your existing contracts, you may not have given as much consideration to fuel costs, because they were written when prices were much lower. Now, with costs rising, those contracts can significantly penalize the organization. Softness in various modes of transportation and geographies present an opportunity to rebid contracts. 
9. Update route planning solutions. Far too many companies still don’t use optimization technologies that could yield significant savings. Compare the capabilities of your legacy solution with its more modern counterpart. Not only are older systems less capable, they’re also harder to use and often require manual workarounds that are less effective at reducing fuel costs. 
10. Promote delivery density with customer steering. Poor delivery planning can make a fleet less fuel efficient. Provide customers with delivery appointment options that increase delivery density. This can reduce the distance traveled per stop and lower fuel costs.
11. Prioritize eco-friendly deliveries. More customers want delivery options that cause minimal harm to the environment. Eco-friendly deliveries reduce carbon footprints and result in lower fuel consumption. Customers are happy, the environment benefits and the seller saves on fuel.

Rising fuel costs can be a significant burden on companies struggling to keep pace with a tumultuous supply chain. With these tools, though, businesses can make the best of the situation now and set themselves up for ongoing success in the future.

Chris Jones is executive vice president of industry and service at Descartes.