If you've opened a freight invoice lately and done a double-take, you're not imagining it.
Across Australia right now, food manufacturers are being hit with fuel surcharges, rate reviews, and cost notices from freight operators — many with little warning and limited explanation. Before you can respond strategically, it helps to understand what's actually driving it.
The short version: Australia's fuel supply is under serious pressure.
The trigger was the escalation of conflict in the Middle East in early 2026, which disrupted shipping through the Strait of Hormuz — a critical passage for roughly 20% of the world's traded oil. Asian refineries that supply the bulk of Australia's refined diesel began diverting or restricting exports. Six oil shipments bound for Australia were cancelled or deferred in March alone, according to Australia's Energy Minister.
Here's the part that caught many people off guard: Australia was already in a vulnerable position. According to the Institute for Energy Economics and Financial Analysis (IEEFA), Australia holds the lowest fuel reserves of all International Energy Agency members — at the onset of the crisis, we had around 30 days of diesel supply. The global average for major importers is 141 days.
Diesel is the backbone of food freight.
Almost every product that moves through a food manufacturer's supply chain travels on a diesel-powered vehicle at some point. Road freight is the dominant mode for domestic distribution. Cold chain — the refrigerated transport your perishable and frozen products depend on — runs on diesel for the truck and electricity for the refrigeration unit. When diesel costs surge, cold chain operators feel it from both directions simultaneously.
Average diesel prices in Australia's five major cities reached 303.5 cents per litre in the week to 25 March 2026 — a rise of 28.6 cents in a single week, according to industry tracking data. Regional routes are paying even more.
Surcharges are already flowing.
Major freight operators including Toll, Linfox, and StarTrack have all flagged fuel surcharge increases. Australia Post announced increased fuel surcharges in late March. For smaller and regional operators, the picture is more immediate — some are making hard calls about which routes remain economically viable.
The government has responded with a temporary halving of the fuel excise — saving approximately 26.3 cents per litre — along with a reduction in the heavy vehicle road user charge for three months. These measures will provide some short-term relief. But they are temporary, and the structural pressures driving fuel costs remain unresolved.
What this means for you.
You haven't done anything wrong. This is a genuine supply-side shock that is flowing through the economy at speed. The food and grocery sector is particularly exposed because margins are already tight and your ability to pass costs downstream is constrained.
Understanding the cause is the first step. The next step — which we'll cover in the following articles in this series — is working out who ultimately bears the cost, how long this is likely to last, and what practical steps you can take right now to protect your business.
This is the first article in a four-part series on managing freight cost pressures in Australian food manufacturing.
References: IEEFA (ieefa.org) | Grattan Institute | SBS News fuel excise coverage | paradza.com Global Fuel Crisis 2026 timeline