Fuel price surge squeezes UK eCommerce supply chains

Diamond Logistics has warned that record UK fuel prices are driving up costs across supply chains, with eCommerce businesses feeling particular pressure.

Daniel Allin, Chief Product and Innovation Officer at Diamond Logistics, said diesel had risen to nearly £2 per litre at some UK forecourts, while petrol was averaging about 175p per litre. He linked the increase to higher oil prices following conflict in the Middle East and said the effects were spreading from logistics firms to manufacturers, retailers and consumers.

The warning reflects a wider concern for businesses that rely on transport to move goods around the country. Fuel is one of the largest variable costs in logistics, and higher prices can quickly push up fulfilment, warehousing and delivery charges for merchants already under pressure on margins.

Diamond Logistics works with more than 1,000 customers, most of them in eCommerce. Allin said many are in start-up or scale-up phases and have limited room either to absorb higher shipping costs or pass them on through price rises without affecting demand.

"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," said Allin.

That squeeze leaves online sellers and other retailers with a difficult choice. If they absorb the extra cost, profitability falls. If they raise prices, consumers may cut spending, which could weigh on broader economic activity.

Allin argued that this makes the fuel shock more than a transport issue. The cumulative effect of higher distribution costs moving through supply chains, he said, could reduce consumer spending and contribute to a wider slowdown.

"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're at the coal face of that effect. We have well over 1,000 customers, primarily in eCommerce, and they're all facing the same inflationary pressures caused by this increased cost of moving goods," said Allin.

Cost pressure

There is no straightforward way to eliminate the impact of higher fuel costs. Instead, Diamond Logistics has focused on reducing avoidable expense in the supply chain through shipping choices, stock placement and software that improves visibility over operations.

One of the main measures it highlights is a multi-carrier shipping model. Its network includes more than 60 carriers, allowing it to choose between providers for each shipment rather than relying on a single operator.

That approach can help when transport costs fluctuate because it gives merchants and fulfilment providers more options on routing and service selection. It does not remove the underlying cost inflation, but it can reduce unnecessary spending on individual consignments.

"As a starting point, we always champion taking a multi-carrier approach to shipping to mitigate on cost. As a company, we've 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're very much at the behest of forces far greater than our own," said Allin.

Network changes

Diamond Logistics also pointed to inventory location as another way to limit fuel use. Its network of more than 40 UK sites allows stock to be held closer to end customers, cutting mileage and reducing the fuel needed for final deliveries.

Small reductions in distance can add up across large numbers of shipments. For retailers with nationwide order volumes, fulfilment location can therefore have a direct effect on transport spending, especially when diesel prices are unusually high.

Technology is the third part of the company's response. Better data on shipments and fulfilment workflows can help businesses identify where time, money and resources are being lost, while automation can reduce inefficiencies in complex logistics networks.

Allin cited the company's Despatchlab fulfilment platform as one example. By bringing operational information together in one system, he said, businesses can get a clearer view of where small changes might lower costs.

Even so, the sector remains exposed to external shocks it cannot control, he said. Recent years have brought a succession of disruptions, including Brexit, Covid, supply chain disruption, driver shortages and geopolitical instability, each reinforcing the need for businesses to adapt quickly when conditions change.

"To caveat the above, none of this removes the fundamental problem - businesses will still remain exposed to factors they simply cannot control. There's 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've 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," said Allin.