Daniel Allin, chief product and innovation officer at Diamond Logistics, speaks out at a time when fuel prices are hitting record highs, with diesel now at over £2.00 per litre at an increasing number of forecourts across the UK. He looks at how rising fuel costs are filtering through the supply chain, putting pressure on e-commerce margins and why businesses need to look closer at the efficiency of their logistics model.
Ongoing conflict in the Middle East is now being felt across the globe. The average price of oil has once again tipped past the $100 threshold which is hugely problematic when all goods travel through a supply chain of some description.
To put the level of hike into context, the average price of oil last year sat at a little over $70 per barrel.
To translate those figures into relatable costs, the impact at the pumps has been significant. In September 2025, UK pump prices averaged around 135p per litre for petrol and 143p for diesel. Today, petrol is averaging around 175p per litre, while diesel has surged to almost £2, hitting a record high and putting further pressure on businesses already facing rising operating costs.
That hike is clearly significant, and its impact is like a domino effect from logistics, through to manufacturers, to retailers and ultimately reaching consumers.
As a logistics and fulfilment business, we are at the coal face of that effect. We have well over 1000 customers, primarily in e-commerce, and they are all facing the same inflationary pressures caused by this increased cost of moving goods.
For most businesses, absorbing additional costs isn’t always an option – certainly not those which are either just getting their business off the ground, or have moved into the scale up phase, which makes up the sum of most e-commerce brands.
Equally, offsetting those costs by passing them on to customers could risk putting consumers off buying altogether. Looking at the wider picture, on a mass scale that will also just further dampen spending and ultimately trigger a wider economic slowdown.
Mitigating these costs has of course been difficult, as there is only so much that you can realistically do.
What we have done, however, is look at where we can take some of that cost out of the equation for ourselves and our customers.
Using multiple carriers, holding stock closer to customers, making better use of technology and, ultimately, identifying where unnecessary miles, cost and inefficiency are creeping into the supply chain, are prime examples of this process.
As a starting point, we always champion taking a multi-carrier approach to shipping to mitigate on cost.
As a company, we have built a network of more than 60 carriers, which means we can select the most appropriate service for each shipment rather than being reliant on a single carrier.
Like every logistics business, significant increases in fuel ultimately have an impact on our cost base. Fuel is one of the biggest variable costs in our sector and unfortunately, as we have repeatedly seen this year, we are very much at the behest of forces far greater than our own.
So, when fuel prices and other transport costs are fluctuating, that extra level of flexibility can really help businesses find the most efficient and cost effective way of getting goods to their destination.
The same principle applies to where goods are held. Having a network of more than 40 locations across the UK gives us the flexibility to hold stock closer to where it is ultimately needed, reducing the distance goods need to travel and, in turn, the fuel required to make those deliveries. Across thousands of shipments, those small reductions in mileage can quickly add up to meaningful savings.
Technology also has an important role to play in this. The more visibility a business has over its logistics operation, the easier it becomes to identify where money, time or resources are being wasted. Automating some of those decisions can also remove a lot of the inefficiency that naturally creeps into complex supply chains.
That is something we have increasingly seen through Despatchlab, our own fulfilment platform, where having all of that information in one place gives us a much clearer picture of what is happening across the network and where relatively small changes can make a difference.
To caveat the above, none of this removes the fundamental problem – businesses will still remain exposed to factors they simply cannot control. There is no silver bullet, and at some point they will inevitably have to absorb some of those additional costs, while also passing some of them down the supply chain as well.
However, the more unnecessary cost we can remove before it gets to that point, the better.
Over the past few years, we have had Brexit, Covid, global supply chain disruption, driver shortages, geopolitical instability and now another significant fuel price shock.
Each has presented an entirely separate challenge, but the underlying lesson is broadly the same – businesses need to be able to adapt when circumstances change – and that very much applies to the fuel crises that we’re in the thick of as of now.