Most shipping chokepoints have a name on a map. The Strait of Hormuz. The Suez Canal. A shipping lane you could point to and a reason ships were avoiding it. The one adding the most cost to a shipment right now does not have a name like that. It is diesel above 6 dollars a gallon, a trucking spot market where flatbed rates are up more than a quarter on last year, and a typhoon season that keeps knocking China’s biggest ports offline, all at the same time.
None of these three things alone would justify an issue. Together, they are quietly adding more to a shipment’s cost and reliability risk than most people are budgeting for, and almost none of it shows up on a map.
Diesel set an all time record in September, and it is already climbing back
The US national average hit a record 6.53 dollars a gallon in the week of September 21, the highest in the EIA’s 32 years of tracking, then slid for several weeks, to 6.38 on September 28 and roughly 6.18 by mid October. It turned back up in the week of October 19, rising nearly 10 cents to 6.28 dollars, which is still 2.66 dollars more than a year earlier. The cause is geopolitical, not seasonal. The US and Iran conflict that began in February has kept the Strait of Hormuz closed for more than 200 days, and crude oil is hovering near 100 dollars a barrel. Diesel also competes for refinery capacity with jet fuel and heating oil, so a shortfall in one distillate tightens supply across all three. This is not a spike that eases with the calendar.
Small carriers cannot absorb this the way large fleets can
Trucking companies typically run on thin margins, and family owned operators with a handful of trucks have almost nothing to cushion a fuel jump this size. Most freight contracts separate a base shipping rate from a fuel surcharge that moves with a diesel benchmark, so the cost is passed through by design rather than absorbed, and when diesel dips the surcharge falls with it: DAT said lower diesel took 3 to 4 cents a mile off average fuel surcharges in the week of October 10, which accounted for nearly all of that week’s drop in all in spot rates. Food distribution and building materials are exposed first, since both depend on frequent, time sensitive shipments where a carrier cannot simply wait out a bad pricing week. What happens to a small carrier’s margin this month shows up as a shipper’s rate increase next month.
Spot rates were already climbing before diesel spiked
DAT’s all in spot rates for the week of October 10 to 16 were 3.09 dollars a mile for dry van, 3.66 for reefer and 3.64 for flatbed, each down 2 to 4 cents on the week, almost entirely because of a lower fuel surcharge. The linehaul rate, which strips fuel out, is the better signal. Flatbed linehaul was 2.65 dollars a mile in early October, up 58 cents, or 28 percent, on a year earlier and 55 cents above its nine year seasonal average, and flatbed is the tightest of the three boards, with a load to truck ratio of 44 against 30 a year before. Dry van and reefer linehaul are holding at 2.26 and 2.76 dollars a mile. This is not only a fuel story.
Capacity is not growing to keep up. Posted flatbed trucks fell 4.2 percent in a single early October week while loads rose 2.2 percent. A 9 to 0 Supreme Court ruling in May, Montgomery v. Caribe Transport II, confirmed that freight brokers can face state law negligent hiring suits over the carriers they select, which gives brokers every reason to be far more selective about who they book rather than taking the cheapest available truck. A tighter, more scrutinized carrier pool was already pushing rates up before diesel made the math worse.
Meanwhile, the typhoon season keeps taking ports offline
Five typhoons, Bavi, Noul, Dolphin, Narra and Saudel, hit East China’s ports in the weeks before September. Dolphin alone left more than 2.4 million TEU of containership capacity caught in congestion, and by early September the global container backlog had reached about 4.3 million TEU, 12.6 percent of the world fleet and above the 2022 peak, with vessels waiting around five days at Shanghai and three to four at Ningbo, and berthing delays touching 10 days at the worst point. Carriers responded by skipping ports outright: Maersk and Hapag Lloyd both bypassed calls at Shanghai, Ningbo and Yantian. Tropical Storm Risk expects Northwest Pacific typhoon activity to run about 60 percent above the historical average this year. The latest, Super Typhoon Champi, was forecast to miss China’s coast but bring heavy rain and pilotage halts to Shanghai and Ningbo through October 26, with berth waits at Shanghai’s Yangshan terminals running 4 to 7 days. Worldwide, port congestion still stands at about 3.36 million TEU, 9.7 percent of the global fleet, by SEKO Logistics’ count. Backlogs like this take weeks to clear, and each new storm resets the clock.
What this means if you are planning inland moves
Budget for fuel surcharges that do not revert quickly, since this spike is geopolitical rather than seasonal and there is no clear date when it resolves. Book capacity earlier and lean on carrier relationships rather than chasing the spot market, since qualified capacity keeps shrinking and brokers are getting more selective about who they will use. And build in a lag when you plan around Asia: congestion at a Chinese port today tends to show up as a booking or scheduling problem on this side of the Pacific several weeks later, not immediately.
What I am watching from here
Whether diesel, which turned back up in the week of October 19 after sliding from its September record, keeps climbing for as long as the Strait of Hormuz stays closed. Whether Champi is a one off or one more storm in a season forecast to run 60 percent above average, and whether Shanghai and Ningbo clear their backlog before peak season ends. And whether trucking capacity keeps tightening enough to hold spot rates high even if fuel costs eventually come down.
That is issue eight. If this was useful, forward it to someone who still thinks supply chain risk only lives offshore.
Dhiraj
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