Budget season has arrived at an awkward moment for supply chain leaders. US diesel climbed above 6.50 dollars a gallon in September, an all time high, after starting the year at roughly 3.46 dollars. The Strait of Hormuz has been effectively closed to shipping since late February, refiners are running at their limits, and fuel inventories are tight on both sides of the Atlantic.
Most 2027 plans being drafted this month share a quiet assumption: that this is a spike, and spikes pass. The data says otherwise. Costs may come down from here. They are not going back to where they were.
The Number Your 2027 Plan Is Probably Getting Wrong
The US Energy Information Administration expects diesel to average about 4.50 dollars a gallon in 2027. That is a meaningful drop from today, and it is still roughly 30 percent above where 2026 began. Distillate inventories on the East Coast are forecast to stay below their usual levels through this winter, and are not expected to recover until the second half of 2027.
For freight, the effect compounds. Fuel now makes up an estimated 25 to 30 percent of trucking operating costs, according to Bain. Carriers are already adjusting: UPS raised its fuel surcharge from 21 percent before the conflict with Iran to 29.5 percent in September, and changed the mechanism so surcharges fall more slowly when prices ease.
Put plainly: if your 2027 freight line is last year's rate plus inflation, your plan has a hole in it before January even starts. The more useful planning question is not "when will this normalize?" It is "what does our cost to serve look like if this is the new floor, and who is accountable for bending it?"
Freight Is No Longer a Line Item. It Is a Leadership Decision.
Bain's advice to shippers this month is to treat freight as a strategic cost, not simply a transportation expense. The practical moves are well known:
Own your surcharge schedule. Set fuel surcharge terms in carrier contracts, tie them to a public weekly diesel index, and limit how often and how far they can move.
Move what can wait. Shift time tolerant, non perishable freight from truck to rail, where one railcar can replace about four truckloads. Cut the expedites and premium air that have quietly become a habit.
Stop paying for empty miles. Work with carriers to fill trucks that would otherwise run empty, and use fleet data to find idling, inefficient routes and maintenance problems.
See the freight inside your supplier prices. Ask suppliers to show the freight portion of their pricing, so you can separate a real cost increase from a convenient one.
None of these is new. What is new is that each one crosses functions. Surcharge terms sit with procurement, mode decisions with logistics, supplier pricing with category teams, and the budget with finance. In many organizations, nobody owns the whole picture. That is not a freight problem. It is a leadership design problem.
Set the Direction Before January
January has a habit of arriving with fresh targets, a calendar full of meetings and several different interpretations of the same plan. In a year when costs will not cooperate, that tradition is expensive. The better move is to use what is left of this year to agree where you are going, what matters most and who owns what.
Make the direction clear. Teams can move with real freedom only when the direction and expectations are explicit. If people are guessing what success looks like, leadership has not done its job yet.
Give every priority an owner and a measure. "Manage fuel exposure" is not a priority. A named leader responsible for cost to serve, with a clear measure such as surcharge terms renegotiated or share of freight moved to rail, is.
Decide what to stop. Being busy is easy. Being effective means occasionally retiring an idea the team has grown attached to: the default expedite, the lane strategy designed for 3 dollar diesel, the project that survives because nobody asked whether it still matters.
Challenge the plan now. Honest questions in November are cheaper than polite agreement followed by confusion in February.
Leave no passengers. Every leader at the planning table should walk out owning something specific.
"Freedom works when the direction and expectations are clear. If people are guessing what success looks like, leadership hasn't done its job." Derek Lutz, CEO, Lean Six Search Group
Three Questions Worth Asking in Your Planning Session
If diesel stays high all year, what would make the biggest difference to our cost to serve? Name the two or three moves, not twenty.
What is getting in the way? Contract terms, missing data, or the simple fact that no single leader owns freight end to end.
What should we stop doing? The answer to this one usually frees more budget than any negotiation.
What This Means for Hiring
The leaders who will matter most in 2027 are not the crisis heroes who absorb every shock with overtime and goodwill. They are the ones who can plan for volatility as a permanent condition, translate it into a budget a CFO trusts and bring procurement, logistics and finance to the same decision.
When we assess candidates for senior logistics, transportation and supply chain roles right now, one question tells us a great deal: "Walk me through the last time a cost you could not control broke your budget. What did you change in the plan, and who did you bring with you?" The strongest answers describe a decision, an owner and a measure. The weaker ones describe a heroic month.
If your 2027 plan depends on a leader you have not hired yet, the time to start that search is before the plan is final, not after the first quarter misses.
An Invitation
If your organization is setting 2027 priorities and the leadership bench behind them is not yet in place, connect with our team for a confidential conversation at leansixsearch.com.
Link by Link, The Newsletter: supply chain talent intelligence, every second Tuesday. Subscribe at leansixsearch.com so the next edition finds you.
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Lean Six Search helps supply chain and procurement organizations build the leadership bench to plan, and deliver, through volatility.
Tags: Supply Chain Strategy, Freight, Diesel, 2027 Planning, Leadership, Logistics, Lean Six Search
Sources
Bain & Company, "Diesel Prices Hit an All Time High: What Should Companies Do?", Oct 1, 2026: https://www.bain.com/insights/diesel-prices-hit-an-all-time-high-what-should-companies-do/
C.H. Robinson, Diesel market update, Oct 2026: https://www.chrobinson.com/en-us/resources/insights-and-advisories/north-america-freight-insights/oct-2026-freight-market-update/diesel/
EIA October 2026 Short Term Energy Outlook, as reported by Hydrocarbon Engineering, Oct 8, 2026: https://www.hydrocarbonengineering.com/refining/08102026/eia-october-steo/
Ti Insight, Global Supply Chain Risk Monitor, October 2026: https://ti-insight.com/briefs/global-supply-chain-risk-monitor-october-2026/
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