Fuel Costs Are Up. Significantly. And Pretending Otherwise Isn’t a Strategy.

What the 2026 Middle East conflict means for the drayage fuel surcharge conversation — and why that conversation can no longer be deferred.

Let’s start with the number, because it’s the number that makes every drayage fuel surcharge conversation in 2026 unavoidable. Diesel fuel hit $4.86 per gallon nationally in the week ending March 9, 2026 — a jump of nearly 96 cents in a single week. That is the largest one-week spike in four years. In California, diesel is already north of $6.00. The EIA has revised its full-year 2026 forecast upward by more than 20% from where it stood just one month ago.

For carriers, shippers, and anyone whose freight touches the road between a port terminal and a warehouse, this is not background noise. This is an operating reality that is repricing every move being made right now — whether the rate sheet reflects it yet or not.

This piece is about that gap: the space between what fuel actually costs and what too many rate conversations pretend it costs. We’re going to talk about why the gap exists, what it actually costs the drayage industry to absorb it, and why the conversation about fuel surcharges is one that responsible partners have to be willing to have openly.

First, the Short Version of Why We’re Here

On February 28, 2026, U.S. and Israeli forces launched military strikes against Iran. Within days, Iran effectively closed the Strait of Hormuz — the waterway through which approximately 20% of the world’s daily oil supply normally flows. Tanker traffic dropped to near zero. Brent crude, which had been hovering around $60 per barrel in early January, briefly crossed $110 before settling near $100 as of this week.

The disruption is not limited to crude oil prices. Refined product supply chains — the ones that fill the trucks, trains, and barges that move diesel fuel to terminals across the United States — have also been disrupted. Three policy responses are underway: Saudi Arabia has activated its East-West pipeline (the Petroline) to route oil overland to Red Sea ports at Yanbu, bypassing Hormuz entirely. The U.S. and the International Energy Agency have coordinated the release of 400 million barrels from strategic petroleum reserves. And on March 12th it was reported that the Trump administration is preparing 30-day Jones Act waivers that would allow foreign-flagged tankers to move fuel between U.S. ports, potentially easing East Coast supply distribution bottlenecks.

There’s also a secondary effect worth noting briefly, because it will hit intermodal drayage markets specifically: roughly 170 containerships with approximately 450,000 TEU of capacity are currently stranded inside the Persian Gulf. When they eventually move, they will arrive at U.S. ports in clusters rather than a steady flow — a replay of the vessel bunching that caused severe terminal and rail congestion during the COVID disruptions of 2021–2022. If you remember containers sitting in Chicago, Kansas City, and Detroit rail yards for weeks while per diem charges ran unchecked — that’s the mechanism that’s building again. But that’s a story for another piece. Today, we’re focused on the fuel.

What the Numbers Actually Show

Fuel price data tells a straightforward story. Diesel began 2026 at roughly $3.48 per gallon — already modestly elevated by historical standards, but manageable in planning models. It climbed steadily through January and February as geopolitical tensions built. Then it moved almost a dollar in a single week when the conflict began.

Table 1: U.S. National Average Retail Diesel — Weekly (Jan 6 – Mar 9, 2026)

Sources: EIA Gasoline & Diesel Fuel Update (March 10, 2026); St. Louis Fed FRED — GASDESW; C.H. Robinson Diesel Market Update (March 2026); Work Truck Online. Jan and Feb weekly figures are approximated from confirmed monthly averages (Jan: $3.52/gal, Feb: $3.72/gal per C.H. Robinson) and sequential EIA reporting. March 2 ($3.897) and March 9 ($4.859) are confirmed EIA weekly releases. *Conflict initiated February 28, 2026.

Table 2: Brent Crude Oil Price Trajectory (Jan – Mar 12, 2026)

Sources: EIA Short-Term Energy Outlook (March 10, 2026); Truck News; CBS News/FactSet; multiple industry sources. Prices are approximate market snapshots for illustrative context.

The crude oil table matters because diesel is a refined petroleum product. When crude moves from $60 to $100, the downstream effects hit diesel prices within days — not weeks. The EIA’s revised full-year 2026 diesel forecast of $4.12 per gallon assumes that Hormuz transit will gradually resume over the coming weeks. If it doesn’t, the ceiling moves higher. GasBuddy analysts have noted that diesel could rise another 35 to 75 cents from current levels if the conflict continues.

Meanwhile, the IATA Jet Fuel Price Monitor — which tracks the same crude feedstock dynamics as diesel — recorded a 58.4% week-over-week increase to $157.41 per barrel in its most recent release. That’s a different fuel in a different mode, but it’s the same market signal: energy costs have moved in a way that is not a blip.

A Brief History of the Fuel Surcharge — and Why It Exists

The fuel surcharge wasn’t invented by carriers looking for an extra revenue stream. It was invented because fuel is the one significant variable operating cost in trucking that is genuinely outside the carrier’s control — and that can move by double-digit percentages in a matter of weeks.

Before FSC structures became standard in the 1970s and 1980s, carriers baked estimated fuel costs into their base rates. That worked reasonably well when oil was stable. It stopped working in 1973 when the Arab oil embargo caused diesel prices to spike dramatically and suddenly. Carriers who had locked in base rates found themselves operating at a loss on every mile. Some survived by renegotiating contracts mid-term. Many didn’t. The FSC mechanism developed as a response to that instability — a transparent, separately-stated, adjustable cost component that moved with fuel prices rather than being frozen into a base rate that couldn’t respond.

Modern fuel surcharge tables typically use EIA weekly diesel data as their reference index, with surcharge percentages that increase as diesel prices rise above a defined trigger point. The logic is simple: when fuel costs go up, the carrier’s cost per mile goes up in direct proportion, and the surcharge adjusts to reflect that. When fuel comes down, so does the surcharge. It’s a pass-through mechanism, not a profit line. In 2026, the drayage fuel surcharge is doing exactly what it was designed to do — reflect the real cost of energy in an environment where that cost has become genuinely unstable.

A fuel surcharge is not a carrier making money on fuel. It’s a carrier not losing money on fuel. Those are very different things.

The confusion — and the friction — tends to arise during extended periods of stable or falling fuel prices, when FSC becomes negotiable in ways it wasn’t originally designed to be. When diesel holds between $3.00 and $3.50 for eighteen months, procurement teams start treating the surcharge as a cost to be optimized or eliminated. All-in rates get quoted. FSC gets rolled into base pricing at the low-fuel assumption. Then fuel moves, and suddenly the math doesn’t work anymore — and the shipper who thought they’d locked in certainty is either demanding the carrier absorb costs it can’t afford to absorb, or watching their carrier quietly reduce service levels to compensate.

What $1.40 per Gallon Actually Costs

Let’s make this concrete. A drayage truck operating in the intermodal market averages roughly 6 to 7 miles per gallon under typical load conditions — short-haul, stop-and-go terminal traffic, heavy containers, frequent idle time. An average drayage move in a market like Chicago, Kansas City, or Detroit runs approximately 60 miles round-trip from terminal to delivery and back.

Table 3: The FSC Math — What Fuel Price Changes Mean per Move

*Assumes 60-mile round-trip at 6.5 MPG average. “50 moves/day” represents a mid-size drayage operation at steady-state capacity. Diesel price sources: EIA (baseline and forecast); FRED GASDESW (March 9 current price); GasBuddy (upside scenario). Calculations are illustrative; actual costs vary by market, truck spec, terminal routing, and idle time.

At 50 moves per day, absorbing the current fuel increase without any FSC recovery means a carrier is losing somewhere between $600 and $700 per day relative to January operating costs — before accounting for any increase in idle time at congested terminals, which burns additional fuel at zero productive miles.

Annualized, that’s over $200,000 in unrecovered fuel costs — for a single mid-size carrier running a standard operation. For a larger fleet, the number scales directly and quickly.

And importantly: that loss doesn’t disappear because the carrier doesn’t itemize it on the invoice. It gets absorbed somewhere. It gets absorbed in deferred maintenance, in skipped equipment upgrades, in reduced driver pay — or eventually, in the carrier reducing capacity in the lanes where the math is worst. None of those outcomes serve the shipper who thought they were saving money by holding the line on FSC.

What Happens When Carriers Absorb Costs They Can’t Sustain

This is the part of the conversation that rarely gets said plainly enough, so we’re going to say it plainly.

The drayage industry is not dominated by large, heavily capitalized conglomerates with deep reserves available to absorb extended fuel cost increases. It is predominantly made up of small and mid-sized operators. When fuel costs rise substantially and FSC mechanisms don’t adjust, carriers face a straightforward choice: reduce capacity in unprofitable lanes or exit the market entirely. The drayage fuel surcharge in 2026 is not a request for a rate increase — it is the mechanism that keeps capacity in the market at all.

We have seen this movie before. After the diesel price spike of 2008 and again during the COVID-era disruptions, carrier attrition was significant. Small operators who couldn’t sustain fuel costs without adequate recovery exited — not dramatically, not with press releases, but quietly. Trucks went to auction. Owner-operators leased to larger firms or parked their rigs. Lane coverage tightened. The shippers who had been the most aggressive about suppressing fuel surcharges found themselves with fewer carriers willing to bid on their freight, often paying spot rates that were significantly higher than the FSC they had refused to pay six months earlier.

The shipper who spends six months refusing fuel surcharges often spends the next six months paying emergency spot rates. The math always catches up.

The health of the drayage carrier market — its depth of capacity, its geographic coverage, its service quality — depends on carriers recovering real costs. When a major input cost like fuel increases by 40% in ten weeks, and the rate structure doesn’t adjust, the industry absorbs that shock through attrition. That attrition is not visible until you need a truck and one isn’t available.

This is not a theoretical concern. Sustained oil-market volatility keeps upward pressure on fuel surcharges and can accelerate capacity exits and shift market share toward fleets with better fuel efficiency and stronger cost control. The spike we’re seeing right now will show up in capacity availability by summer if the market doesn’t adjust.

The Conversation We Need to Have with Our Customers

Mark-it’s approach to pricing has always been grounded in transparency. We tell customers what things cost, we explain why, and we work with them on how to manage total landed cost, which is a different and more useful conversation than negotiating line items in isolation.

On fuel, that means being direct: fuel surcharges are not negotiable in a market where diesel has increased by $1.40 per gallon in ten weeks. That’s not a position — it’s arithmetic. A carrier that agrees to absorb current fuel costs without FSC recovery is either operating at a loss or is modeling a future rate increase that will come later and be larger. Neither of those outcomes serves the customer.

What we can do — and what we encourage our customers to ask of all their drayage partners — is be specific and transparent about how FSC is calculated, how it adjusts as fuel prices move (in both directions), and how it relates to the total cost of the move. The FSC should not be an opaque number on an invoice. It should be a visible, explained, adjustable component that makes the rate relationship honest.

Questions Every Shipper Should Be Asking Right Now

• What index does my carrier use to calculate FSC — and how often does it update?
• If diesel falls back toward $3.50 in Q3, does the FSC decrease automatically, or do I need to renegotiate?
• What is the all-in cost of this move at current diesel prices — and what does it look like at $5.50?
• Is my carrier financially stable enough to maintain service levels through an extended fuel spike — or are they absorbing losses that will eventually affect capacity?
• Am I focused on the rate per move, or on total landed cost including the delays and extra charges that come from working with under-capitalized carriers?

These are not hostile questions. They’re the right questions. Any carrier that can’t answer them clearly is a carrier whose cost structure you don’t fully understand — and in a volatile fuel environment, that’s a risk.

The Position We’re Taking

Mark-It Express Logistics, LLC operates in many of the most active inland intermodal drayage markets in the country. We run asset-based operations with real trucks, real drivers, and real fuel tanks that we fill at current market prices. We don’t outsource and we don’t use broker networks where someone else absorbs the variable costs. When diesel moves, we feel it directly.

We’re not here to lecture anyone about fuel markets. We’re here to be honest partners in a complicated cost environment — and right now, honesty requires saying that the fuel surcharge is going up, that it will likely stay elevated for the duration of this conflict and its aftermath, and that the carriers who survive this cycle with capacity and service quality intact will be the ones whose rate structures actually reflect what it costs to move freight.

We will keep you informed as fuel prices move. We will document our FSC methodology, so there are no surprises. And we will work with you on total landed cost — because that’s always been the right conversation, and right now it’s also the most urgent one.

We don’t sell promises. We deliver freight. And right now, delivering freight is more expensive than it was ninety days ago. Let’s talk about what that means for your operation.

---

Sources & References

• EIA Gasoline & Diesel Fuel Update (March 10, 2026)
• St. Louis Fed FRED: US Diesel Sales Price — GASDESW (March 9, 2026: $4.859/gal)
• C.H. Robinson Diesel Market Update, March 2026
• Truck News: “US diesel average hits $4.859 a gallon, with further price spikes possible” (March 10, 2026)
• Work Truck Online — weekly diesel trend reporting
• IATA Jet Fuel Price Monitor — 58.4% week-over-week increase to $157.41/barrel
• CNBC: “The two oil pipelines helping Saudi Arabia and UAE bypass the Strait of Hormuz” (March 12, 2026)
• Middle East Eye: “Swinging into action: The Saudi Arabian pipeline designed to bypass Hormuz” (March 10, 2026)
• Bloomberg/Yahoo Finance: “Oil Armada Heads to Red Sea as Saudis Divert From Hormuz” (March 10, 2026)
• OilPrice.com: “Saudi Aramco Cuts Oil Output as Hormuz Crisis Chokes Exports” (March 9, 2026)
• Axios: “What the Jones Act does and how a Trump suspension could affect fuel prices” (March 12, 2026)
• Reuters: “Trump administration tells oil industry to prepare for Jones Act waiver” (March 12, 2026)
• CBS News: “Trump weighs Jones Act waiver amid rising fuel prices” (March 12, 2026)
• Euronews: IEA coordinated 400M barrel SPR release, Jones Act waiver details (March 12, 2026)
• EIA: “Amid regional conflict, the Strait of Hormuz remains a critical oil chokepoint”
• Wikipedia: 2026 Strait of Hormuz crisis

---

Document prepared by Position Global for Mark-It Express Logistics, LLC | March 2026
mark-itexpress.com | Your Partner in Expedited Logistics