Material Insights · Understanding the Material World

Crude oil and Transport and logistics

Fuel is the largest single cost in moving goods, 42.1% of road freight expenses in India and 31.4% of airline costs forecast for 2026, so crude prices pass quickly into freight rates through surcharges and squeeze carriers' margins when they cannot.

Crude oil (energy) and Transport and logistics (industry): 3 relationships.

How they are linked

1. Diesel, bunker and jet fuel

Physical flow · Strong · Crude oil → transport and logistics

Trucks, ships and aircraft run almost entirely on oil products, so fuel is the core operating input of freight; the site rates crude 4 of 5 on criticality for fuel suppliers and container shipping lines.

  • 4 of 5 criticality for container shipping lines and transport fuel suppliers
  • 42.1% fuel share of road freight expenses in India, 2023-24 study
  • 104 billion gallons airline fuel use expected in 2026, unchanged on 2025

The site rates road freight operators lower, at 2 of 5, yet in India fuel is still the largest part of trucking cost, so price exposure is high even where diesel supply is easy to secure. Shipping and aviation depend on specialised bunker and jet fuels.

Enterprise types that depend on it:

  • Fuel and energy suppliers (diesel, bunker, jet fuel, charging): diesel, bunker and jet fuel (criticality 4 of 5)
  • Container shipping lines: bunker fuel (criticality 4 of 5)
  • Air cargo carriers and express integrators: jet fuel (criticality 3 of 5)
  • Road freight fleet operators: diesel (criticality 2 of 5)

Sources: Material Insights; Outlook Business; IATA

2. Fuel into freight rates

Cost and price · Strong · Crude price → fuel surcharges and carrier margins

Carriers add bunker and fuel surcharges to rates when oil rises, but contracts and competition delay or limit the pass-through, so oil spikes cut margins first.

  • 25.4% to 31.4% fuel share of airline operating costs, 2025 to 2026 forecast
  • US$ 252 billion to US$ 350 billion airline fuel bill, 2025 to 2026 forecast
  • US$ 30 to 35 billion possible extra container shipping fuel cost if fuel stayed 65 to 76% above 2025 for a year

With jet fuel expected to average US$ 152 a barrel in 2026 against US$ 90 in 2025, IATA halved its 2026 airline profit forecast to US$ 23 billion, a 2.0% margin. Sea-Intelligence judged the shipping impact not yet destructive, since lines can add surcharges; Maersk's container business alone spent US$ 6.3 billion on bunkers in 2025.

Sources: IATA; The Loadstar (Sea-Intelligence data)

3. Rail versus road

Substitution · Medium · Rail and water can replace diesel trucking

Rail moves freight in India at a far lower cost per tonne-km than road or air, and fuel is the largest part of road freight cost, so shifting cargo off roads cuts both cost and diesel exposure.

  • ₹1.96 average rail freight cost per tonne-km in India, 2023-24
  • ₹72 average air freight cost per tonne-km in India, the highest of any mode

The DPIIT-NCAER study names fuel, congestion and over-reliance on trucking as the main drivers of India's logistics cost, made worse by steep diesel taxation and toll plaza delays. Modal shift suits bulk and long-haul cargo; short-haul and last-mile freight stays on trucks.

Sources: Outlook Business

For investors

Key learnings

  1. Fuel is the biggest single freight cost, 42.1% of Indian road freight expenses and a forecast 31.4% of airline costs in 2026, so oil prices drive carrier earnings.
  2. Pass-through is partial and lagged: the 2026 jet fuel spike halved IATA's airline profit forecast to US$ 23 billion even as surcharges rose.
  3. Rail freight, at about ₹1.96 per tonne-km in India in 2023-24, is the cheaper option for bulk and long-haul cargo, and an oil spike widens its advantage over diesel trucking.

What to track

  • Jet fuel and bunker fuel prices: Lead changes in carrier costs and surcharges (Weekly · IATA fuel monitor, Ship and Bunker)
  • Carrier fuel surcharges: Show how much of the fuel cost is being passed on (Monthly · shipping lines and airlines)
  • Diesel retail price in India: Sets road freight cost (Daily · oil marketing companies, PPAC)

For policymakers

Key learnings

  1. India's logistics cost was about 7.97% of GDP, ₹24.01 lakh crore, in 2023-24, and fuel is the largest part of road freight cost, so diesel taxes weigh directly on competitiveness.
  2. Small firms spend nearly 17% of output value on moving goods against about 7.6% for large firms, so fuel shocks hit small enterprises hardest.
  3. Shifting freight to rail and waterways reduces both logistics cost and oil import exposure.

What to track

  • Logistics cost as share of GDP: Measures progress on freight efficiency (Annual · DPIIT, NCAER logistics dashboard)
  • Rail freight loading: Shows how much freight moves by rail rather than diesel trucks (Monthly · Ministry of Railways)

India

India's logistics cost was about 7.97% of GDP in 2023-24, with fuel at 42.1% of road freight expenses, and the heavy reliance on trucking keeps freight costs tied to diesel prices and taxes.

Sources

  1. Transport and logistics: materials, Material Insights (2026)
  2. India's logistics cost pegged at 7.97% of GDP in first systematic study (DPIIT-NCAER), Outlook Business (2025)
  3. Middle East disruptions and high fuel prices halve airline industry profitability, IATA (2026)
  4. Rising fuel price could see box shipping face a bill of up to $35bn, The Loadstar (Sea-Intelligence data) (2026)