ASCI Connect

Fuel represents a significant operating cost for transport providers, particularly in long-haul trucking and heavy freight operations. For many operators, diesel costs can represent 25–35% of total operating expenses. When fuel prices rise, logistics companies typically implement fuel surcharge mechanisms to recover these costs. While this helps maintain operational viability for carriers, it also means cost increases are rapidly transmitted to shippers, manufacturers, and retailers.

The result is a cascading effect:

• Higher transport costs for manufacturers moving goods from production facilities to distribution centres.

• Increased wholesale distribution expenses for retailers moving inventory between warehouses and stores.

• Rising last-mile delivery costs, particularly in e-commerce supply chains.

Over time, these cost pressures contribute to higher shelf prices for consumers, particularly for goods that are bulky, perishable, or frequently replenished such as groceries, construction materials, and consumer staples.

Over the past two decades, many logistics networks in Australia have been optimised for cost efficiency rather than shock resilience. Centralised distribution centres, lean inventory strategies, and just-in-time replenishment models reduce holding costs but can make supply chains more vulnerable to external shocks, including fuel volatility.

If sustained fuel price increases persist, companies may need to reconsider network design strategies such as:

• Regionalising distribution centres to reduce transport distances

• Increasing inventory buffers to reduce transport frequency

• Shifting freight to rail or coastal shipping, where possible, to reduce fuel exposure

However, these changes involve significant capital investment and long lead times, meaning the logistics sector's ability to adapt quickly is limited.

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Dylan Palmer-Givan
Supply Chain Leader
dylan.palmer-givan@smith-nephew.com
Australia
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Hi Dylan, interesting and highly pertinent points. Just came across this article in SupplyChain 24/7 (a US publisher) - see link below - on their long quest to build a road that powers electric trucks. There is another link embedded in the same article that takes the reader to electric semi-trucks. The concept is called dynamic wireless power transfer. Admittedly a very futuristic and ambitious project but perhaps not totally unrealistic (otherwise why keep pursuing it?). 

In my view Australia (& others) have to move away from an overreliance on fossil fuels. Electric trucks are not a new thing per se, they have been rolled out now for a number of years. With sustainability becoming a central focus for many organizations, and technological advancements making electric vehicles more efficient than ever, warehouses and distribution centres are rapidly shifting to electric lift trucks. This transition isn't just about going green-it's about reaping a range of operational and financial benefits that are redefining material handling. For instance, Volvo has announced a significant order from Danish logistics giant DSV, marking one of the largest commercial deals for electric trucks in Volvo's history. The agreement, announced in 2024, includes the purchase of 300 battery-electric trucks to be delivered between 2024 and 2026. This order represents approximately 8% of the total 3,800 electric trucks Volvo has delivered since 2019, further cementing its leadership in the electric truck market. However, the switch to electric trucks is still slow across the industry because of the high costs and the lack of fast-charging stations, which have slowed down the transition to greener vehicles.

Nevertheless, food for thought!

Inside Purdue's Plan to Build Highways That Charge Electric Trucks - Supply Chain 24/7

Best regards,

Klaus

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Klaus Zillner
Senior Consultant
klauszillner@yahoo.com
Australia
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Original Message:
Sent: 09-03-2026 14:49
From: Dylan Palmer-Givan
Subject: Australia's Network Resilience vs Cost Efficiency

Fuel represents a significant operating cost for transport providers, particularly in long-haul trucking and heavy freight operations. For many operators, diesel costs can represent 25–35% of total operating expenses. When fuel prices rise, logistics companies typically implement fuel surcharge mechanisms to recover these costs. While this helps maintain operational viability for carriers, it also means cost increases are rapidly transmitted to shippers, manufacturers, and retailers.

The result is a cascading effect:

• Higher transport costs for manufacturers moving goods from production facilities to distribution centres.

• Increased wholesale distribution expenses for retailers moving inventory between warehouses and stores.

• Rising last-mile delivery costs, particularly in e-commerce supply chains.

Over time, these cost pressures contribute to higher shelf prices for consumers, particularly for goods that are bulky, perishable, or frequently replenished such as groceries, construction materials, and consumer staples.

Over the past two decades, many logistics networks in Australia have been optimised for cost efficiency rather than shock resilience. Centralised distribution centres, lean inventory strategies, and just-in-time replenishment models reduce holding costs but can make supply chains more vulnerable to external shocks, including fuel volatility.

If sustained fuel price increases persist, companies may need to reconsider network design strategies such as:

• Regionalising distribution centres to reduce transport distances

• Increasing inventory buffers to reduce transport frequency

• Shifting freight to rail or coastal shipping, where possible, to reduce fuel exposure

However, these changes involve significant capital investment and long lead times, meaning the logistics sector's ability to adapt quickly is limited.

------------------------------
Dylan Palmer-Givan
Supply Chain Leader
dylan.palmer-givan@smith-nephew.com
Australia
------------------------------

Hi Dylan,

Further to our "discussion" - see link.

https://www.abc.net.au/news/2026-03-22/iran-war-leaves-asias-oil-refiners-scrambling/106470932?utm_source=abc_news_app&utm_medium=content_shared&utm_campaign=abc_news_app&utm_content=link

------------------------------
Klaus Zillner
Senior Consultant
klauszillner@yahoo.com
Australia
------------------------------

Original Message:
Sent: 09-03-2026 14:49
From: Dylan Palmer-Givan
Subject: Australia's Network Resilience vs Cost Efficiency

Fuel represents a significant operating cost for transport providers, particularly in long-haul trucking and heavy freight operations. For many operators, diesel costs can represent 25–35% of total operating expenses. When fuel prices rise, logistics companies typically implement fuel surcharge mechanisms to recover these costs. While this helps maintain operational viability for carriers, it also means cost increases are rapidly transmitted to shippers, manufacturers, and retailers.

The result is a cascading effect:

• Higher transport costs for manufacturers moving goods from production facilities to distribution centres.

• Increased wholesale distribution expenses for retailers moving inventory between warehouses and stores.

• Rising last-mile delivery costs, particularly in e-commerce supply chains.

Over time, these cost pressures contribute to higher shelf prices for consumers, particularly for goods that are bulky, perishable, or frequently replenished such as groceries, construction materials, and consumer staples.

Over the past two decades, many logistics networks in Australia have been optimised for cost efficiency rather than shock resilience. Centralised distribution centres, lean inventory strategies, and just-in-time replenishment models reduce holding costs but can make supply chains more vulnerable to external shocks, including fuel volatility.

If sustained fuel price increases persist, companies may need to reconsider network design strategies such as:

• Regionalising distribution centres to reduce transport distances

• Increasing inventory buffers to reduce transport frequency

• Shifting freight to rail or coastal shipping, where possible, to reduce fuel exposure

However, these changes involve significant capital investment and long lead times, meaning the logistics sector's ability to adapt quickly is limited.

------------------------------
Dylan Palmer-Givan
Supply Chain Leader
dylan.palmer-givan@smith-nephew.com
Australia
------------------------------