Grocery Will Have to Deal with “Higher for Longer” Freight Costs

Oil prices move quickly, whether that’s West Texas Intermediate in the US or Brent in the UK. These days we can see alarming swings from hour to hour, depending on the news out of the conflict zone in the Persian Gulf. 

Of course fuel prices move quickly, too, albeit over days – not hours. 

Freight costs, on the other hand, adjust more slowly. They’re “sticky,” too, tending to remain elevated once they rise. The chart below, which contrasts crude price swings with freight costs, reflects that pattern in stark fashion. 

Oil prices actually declined through much of 2025, while freight costs continued to increase. The Cass Freight Index, which tracks freight spending across a wide swath of US industries, including consumer packaged goods (CPG) and retail, showed shipment expenditures rising roughly 9% year over year, even as volumes softened. 

Of course, that divergence indicates that transportation pricing is being driven by more than fuel alone.

Freight Costs Are a Complex Brew

Freight costs naturally reflect a combination of inputs: labor, routing complexity, insurance, and network utilization. Driver wages remain elevated following pandemic-era increases, and equipment and insurance costs have also trended higher. Many rates reset on annual or multi-quarter contracts, which delays any benefit from lower fuel prices and locks in increases once they occur.

And so the current, ongoing oil price increases are building on this higher base. With WTI crude currently moving up and down the $90 range, and London benchmark Brent topping US$100 a barrel, new surcharges and rate adjustments are surely being layered onto already elevated transportation costs.

For grocers, these changes are not always labeled explicitly as freight. They appear in vendor cost increases, shorter pricing windows, and margin pressure at the category level. 

In categories like canned goods, frozen foods, and imported staples, suppliers have increasingly cited logistics costs in recent price adjustments. Because transportation affects most categories – particularly those with longer or more complex supply chains – the impact is broad.

Here’s What to Do About Creeping Freight Costs

For grocery retail, the operational response is unpleasant but straightforward: retailers need to assume a higher baseline for freight and plan accordingly. That includes earlier engagement with suppliers, closer scrutiny of cost drivers, and near-ruthlessly disciplined assortment and pricing decisions. 

Clear communication also matters. Surveys consistently show that shoppers are more accepting of price increases when the drivers are explained in simple terms. “We’re in this together” positioning helps – because it happens to be true.