Oil prices have been climbing for several months, and the increase is having a direct impact on transport companies, which consume substantial quantities of diesel each year. According to a major Luxembourg-based transport firm, the current price of diesel is not causing panic within the industry, but it is generating growing concern.
Although oil prices have not yet reached their historical peak, they are rising at their fastest pace in years, creating renewed uncertainty across the sector. After gradually stabilising following the economic shock triggered by the war in Ukraine, pressure on the transport industry had eased compared with the situation three years ago.
However, renewed international tensions are once again unsettling the market, raising fears that the situation could deteriorate further. Ben Frin, finance director of a large Luxembourg transport company, said the sector had already experienced the severe consequences of sudden energy price spikes.
“There is no panic on our side, but there is concern,” says Frin. “What worries us more is that we have seen this before. After 2022, when the war in Ukraine began and energy prices rose sharply, costs in our sector increased dramatically. We were unable to adjust our transport prices quickly enough, meaning costs overtook our revenue and created serious difficulties across the industry.”
Diesel remains a central component of operating costs. The company consumes around 12 million litres of fuel annually, representing roughly a quarter of its total expenditure. As a result, rising fuel prices have an immediate effect on profitability.
Although transport companies apply fuel surcharges to their rates in order to pass on higher diesel costs to clients, these adjustments do not take effect immediately.
“We apply diesel surcharges to our transport tariffs”, Frin explained. “When diesel prices rise at the pump, we adjust our transport prices accordingly. In that sense we are partly protected. However, there is always a delay. A rise in pump prices today does not mean transport prices increase tomorrow or the day after. There is typically a delay of one to three weeks, which means we must temporarily absorb the costs ourselves. That puts pressure on our cash flow.”
Additional strain comes from so-called ‘empty kilometres’ – journeys made without cargo that are not billed to clients. These account for around 10–15% of total mileage and further amplify the impact of rising diesel prices.
For now, companies say they are still managing the situation, but concerns remain about how the situation may develop over the longer term.
The effects are already being felt elsewhere in Europe. In France, the situation has become increasingly strained, with around 18% of petrol stations currently experiencing supply difficulties. In many locations at least one type of fuel – petrol or diesel – is unavailable. In other areas, restrictions have been introduced limiting motorists to a maximum of 30 litres per vehicle.
Were such conditions to emerge in Luxembourg, industry representatives warn the consequences for the transport sector would be severe.
For the time being, however, the situation in Luxembourg remains stable. The Groupement Energies Mobilité Luxembourg said it has no concrete information indicating supply shortages in the national fuel network.
