News / Forwarders brace for strikes as diesel surge hits trucking and margins

Fuel price spikes brought on by the US/Israeli war against Iran have left forwarders suffering sleepless nights as they contend with freight adjustment charges and the increasing prospect of trucker strikes across several regions, most notably South America.

S&P Global Platts pointed out yesterday that diesel prices seemed to have been most affected by the conflict, rising some $258 per tonne over the course of the last week, with Bangladesh, Brazil, and the UK among those particularly exposed due to a reliance on imports of the fuel.

Sources told The Loadstar that there were “very real” threats of strikes in both Bangladesh and Brazil unless government intervened to help absorb some of the cost being borne by the haulage sector as a cost of the war.

One Brazil-based forwarder told The Loadstar: “We are already seeing concrete impacts in Brazil from this war, with the situation having become a lot more sensitive in the last few days, particularly concerning these fuel price spikes.

“Diesel prices have increased dramatically since the escalation of the conflict, with reports in a relatively short time of an increase of 20-25% thanks to an overall surge in global oil prices, and given Brazil imports 25% of its diesel, it cannot be ignored.”

Making up about 33% of trucking costs in the South American powerhouse, the rise in diesel has forced an increase in not only freight rates but also the margins that forwarders are able to make, with concerns that contracts are being put on the line.

Agriculture, food, and goods and services are among the sectors struggling with the sudden price hikes, while the forwarder said that truckers’ unions threats of calling a national strike if the government did not intervene to reduce the cost implications further muddied the water.

The forwarder continued: “Logistics in the country has been badly impacted, but the government has acted, dropping taxes on diesel, upping the utilisation of the country’s refineries, alongside tightening price controls to try and get ahead of fears of inflation.”

Part of the problem for hauliers is that while their costs are rising dramatically, freight rates have struggled to follow suit, with truckers and haulage firms left to absorb the damage – it is a theme being seen elsewhere, with concerns that strikes may break out in Bangladesh.

Those forwarders we spoke to said that these “secondary effects” from the war were what was keeping them up most at night, with only those directly supplying the Gulf and Middle East countries contending with business downturns.

In South Africa, delays brought about by the effective closure of the Strait of Hormuz for any carriers deemed friendly with either Israel, the US or their allies is prompting a reduction in the country’s stockpiles of fuel.

“For now, we are still pretty secure but with less than our usual buffer, the aviation industry, in particular is growing pretty nervous, although there is talk that the Strait is ‘open’ for vessels from South Africa,” a South African forwarder told The Loadstar.

“As for capacity, it appears as if the supply shock is settling and the excess is being slowly absorbed by the re-routings.”