Back on the Rollercoaster: Supply Chain Stability Remains Out of Reach

Victoria Jones, CCLP, CCLMP, discusses the current state of instability in the supply chain

The supply chain has been on what feels like a rollercoaster over the past few years, and the environment remains highly dynamic. Market volatility is once again approaching levels not seen since the COVID era, which is something many of us had hoped was behind us.

Between persistent driver shortages and rising geopolitical tensions in the Middle East, the logistics landscape is entering another period of uncertainty that requires careful navigation.
Since the conflict between the United States and Iran began, diesel prices have increased by nearly 28%, raising transportation costs across the entire supply chain. As a result, carriers have already begun imposing emergency fuel surcharges and other temporary fees confirming that energy volatility has returned as one of the biggest wildcards in global logistics. The shelf life of these increases will remain to be seen as the market is in a highly reactive state while visibility remains limited, requiring supply chain teams to stay highly adaptive.

These emergency measures are not limited to trucking as we are seeing the ocean freight sector beginning to respond as well. Global shipping giant A.P. Moller-Maersk has already announced the implementation of an emergency bunker surcharge due to the soaring cost of marine fuel. These EBS charges are intended to maintain operational stability and ensure that carriers have reliable access to the fuel levels required to maintain service levels. These EBS surcharges will be introduced globally beginning March 25 and will be reviewed every two weeks, and although I’m hopeful we won’t see these charges implemented for long, the truth is that we are just along for the ride. While these adjustments are necessary from a carrier perspective, they raise an important question, what does this mean for logistics buyers and ultimately for the consumer?

For shippers, rising fuel costs are rarely absorbed quietly. Transportation is one of the most variable cost components in a supply chain and can account for almost 30% of the transaction, meaning sudden spikes often force companies to make difficult decisions. Some will pass the cost downstream through higher product pricing while others may attempt to offset the increases through tighter inventory controls, renegotiated freight contracts, or shifts in modal strategy. Regardless of the approach, volatility at the energy level inevitably works its way through the entire supply chain and more often than not, it takes its toll on the pockets of the consumer.  

But fuel is only one piece of the puzzle. Capacity pressures are quietly building in the trucking sector and had already begun putting pressure on shippers for weeks before the new events in the Middle East began to unfold. Driver shortages have been a persistent challenge for years, but recent regulatory changes and immigration enforcement actions have begun to further tighten the available labor pool in North America. Fewer qualified drivers means less available capacity, which in turn puts upward pressure on freight rates. If we look back to just a year ago, the freight market was still characterized by excess capacity and suppressed rates but the picture is changing in our market under today’s circumstances, resulting in rates once again moving upwards on the pricing scale. We hear a lot about quiet quitting these days, and what we are seeing in the carrier capacity pool is similar, and the best way to describe it is quiet capacity loss. We have seen many small carriers pushed out of the market this past year, which means we are left with even less capacity just when demand was beginning to recover.

When you combine constrained capacity with rising fuel prices, the result is a market that becomes increasingly sensitive to disruption. The smallest shift in demand or geopolitical events can trigger massive reactions in pricing and service availability, as we are clearly seeing now. Increases in air freight pricing is a challenge many supply chain leaders are finding themselves navigating as conflict and airspace closures are forcing airlines to reroute and increase rates up to 70% in some lanes. Air freight is responsible for roughly a third of global trade value, forcing some shippers to make difficult decisions and juggle between cost and service reliability.

This dynamic is particularly challenging for industries dealing with perishable products, where timing is critical and storage flexibility is limited. Specifically in the Food and Dairy Sectors, where I currently call home as the supply chain manager at Tyers Foods International Inc., transportation disruptions or sudden rate increases can quickly translate into operational risk. Products with limited shelf life cannot simply wait for the market to stabilize, meaning yet again we find ourselves with limited room for flexibility. 

These factors show us that volatility in the supply chain rarely comes from a single source. It emerges from the combination of multiple pressures, energy markets, labor availability, geopolitical conflict, and shifting consumer demand. When several of these forces move at once, the system becomes far more fragile than it appears on the surface.

For supply chain professionals, the goal is no longer simply to optimize for cost and the focus must increasingly shift toward resilience. This means we must maintain and continue to build diversified carrier networks, flexible routing strategies, and stronger partnerships across the logistics ecosystem. Predicting the next disruption is nearly impossible, but building systems capable of absorbing shocks is not.

The rollercoaster may not be slowing down anytime soon and for those of us perpetually along for the ride the challenge we find ourselves facing is not whether volatility will continue but whether our networks are prepared to withstand it. 

 

Victoria Jones, CCLP, CCLMP
Supply Chain Manager
Tyers Foods International