Fuel Price Surge Puts Fresh Pressure on Australia’s Freight and Logistics Industry
Rising oil and diesel costs are squeezing trucking businesses with thin margins, increasing the risk of higher transport and consumer prices across Australia
Australia’s freight and logistics industry is facing renewed pressure as higher fuel prices increase operating costs for trucking businesses that are already dealing with tight margins and rising expenses. Global oil prices recently climbed towards US$120 a barrel amid heightened geopolitical tensions in the Middle East, putting additional pressure on an industry that moves goods ranging from food and furniture to products delivered directly to households.
Higher fuel costs flow through supply chains
For trucking operators, fuel is one of the largest operating expenses. John Di Losa, chief executive of refrigerated transport company Cold Xpress, said his business was unable to absorb the latest increase and was instead passing higher costs through to customers. The company adds 1.55% to invoices for every 5-cent increase in fuel prices, meaning higher transport costs can quickly move through manufacturers, food processors and distributors.
The impact extends well beyond individual transport businesses. CreditorWatch said the road transport industry is closely connected to the wider economy because it moves a large share of the goods Australians buy and have delivered. With higher freight charges feeding into businesses across the supply chain, rising fuel costs could eventually appear in grocery prices, cafe bills and other consumer expenses.
Trucking businesses already under pressure
The latest fuel shock comes after a difficult period for the sector. CreditorWatch data showed that one in 12 road transport businesses closed in 2025, while insolvencies across the industry increased by around 40% compared with 2024. Operators have also been dealing with higher mechanical costs, refrigeration expenses, land tax and other overheads.
Profit margins are also extremely thin. NineSquared director Phil Bullock said most trucking operators have profit margins below 3%, leaving limited capacity to absorb several cost increases at the same time. The industry is also facing structural challenges including driver shortages and concerns around contracting practices.
Higher transport costs could add to inflation
The pressure on freight companies could have broader economic consequences if elevated fuel prices persist. The freight and logistics industry contributes around 8% of Australia’s GDP and moves about 90% of everyday goods across the country, meaning higher transport costs can affect both the availability and price of products.
NAB economists have warned that inflation could rise above 5% by the middle of the year as higher oil prices feed into the economy. With households and businesses already facing elevated costs, another increase in transport expenses could add further pressure across supply chains. Pasted text
What it means for investors
For investors, the rising cost of fuel creates pressure for transport, logistics, retail and consumer-facing businesses, particularly companies with high freight requirements and limited pricing power. The ability of businesses to pass higher fuel expenses on to customers will be an important factor as energy costs remain volatile.
At the same time, continued pressure on transport operators could contribute to broader inflation and influence household spending, business margins and interest-rate expectations. The key issue will be whether higher fuel prices prove temporary or become a more persistent cost across Australia's supply chains.
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