Diesel costs at record highs as UNFI hedges; Wright says prices have peaked
Diesel at record highs is squeezing carriers right now, and UNFI told investors it is leaning on locked-in fuel prices and cutting out unnecessary miles to keep that cost from eating its margins. For anyone hauling freight or buying diesel by the load, that is the development that matters today. The Energy Secretary says relief is coming. The invoices say otherwise.
UNFI's hedge
UNFI's move is a familiar playbook for haulers. Lock in price where you can, strip out empty miles where you can't. With diesel at record levels, a distributor running that many trucks has every reason to hedge the fuel line rather than ride the spot market and hope. If a grocery distributor of UNFI's size is paying up to lock in forward diesel, smaller fleets without that buying power are the ones feeling it hardest, because they are still exposed to whatever the rack does next week.
Wright's call
Chris Wright told ABC News on Sunday that gasoline and diesel "peaked a few weeks ago." Brent gives him some cover and some trouble. Futures briefly tagged $109.99 a barrel overnight before retreating from five-month highs, as signs of recovering Middle Eastern supply offset fresh attacks on energy infrastructure and shipping lanes. Crude could ease if that supply keeps returning and the attacks stay contained. If the infrastructure hits escalate, the peak Wright is calling may not hold, and fuel surcharges would follow Brent back up.
The Russian diesel deal
Trump's decision to import Russian diesel into the US is the wildcard sitting under all of this. The stated logic is not obvious, and OilPrice's Simon Watkins argues there is more to it than the surface read. For US jobbers and haulers, the only question that counts is supply. More diesel barrels landing on US docks could take some pressure off the record prices UNFI and other buyers are fighting. Whether the volumes are real and whether they clear politically is far from settled.
Swappable batteries
Ability Tri-Modal, a California carrier, is converting diesel tractors to electric using swappable batteries it says can be changed out in minutes. It is a niche play for now, drayage and short-haul lanes where range math works. Worth watching as one more small bite out of diesel demand at the margin, not a reason to change your fuel buying.
What to watch
Whether Brent holds below its overnight high or the infrastructure attacks push it back up. Whether Trump's Russian diesel barrels actually arrive and in what volume. And whether smaller fleets can follow UNFI into hedging before the next leg higher, or get caught paying spot at the top.