Shrinking market forces Australian businesses to rethink freight

A SHRINKING number of market carriers and higher diesel prices since the start of 2026 shows Australian businesses can no longer rely on competitive tendering to control freight costs, a new report says.

The report was prepared by supply chain consultancy Prological.

The report, Freight in Focus: Why the biggest freight savings come from re-engineering, not renegotiating, shows almost 9% of road transport businesses left the market in the 12 months to November 2025.

This contraction of transport companies was said to be structural, driven by thin margins, rising costs, and the capital intensity of running a fleet.

The pressure has only intensified in recent months due to the closure of the Strait of Hormuz pushing diesel prices to above $3 a litre.

The report identifies four operational levers available to businesses: freight segmentation, where specialist carriers are assigned to different parts of the freight task; bespoke freight methodologies, such as overnight road solutions that can replace air freight at a fraction of the cost; equipment optimisation, matching vehicles (sometimes bespoke) to product profiles to reduce wasted fuel and capacity; and complex multi-carrier break-bulk strategies that combine providers across corridors for lowest cost and fastest transit.

Prological argues that the real opportunity lies in removing unnecessary activity from the supply chain: reducing the number of times freight is stopped, touched, or moved between origin and destination.

Prological managing director Peter Jones said freight had previously been bought like a commodity where purchasing teams negotiated on price, carriers absorbed the pressure, and the cycled repeats.

“Given the situation of increased fuel costs, the businesses getting the best results are the ones who have stepped away from that cycle entirely and started treating freight as an engineering challenge,” Mr Jones said.

“The increase in diesel has meant that more than a third of what a business pays a long-haul transport provider has effectively doubled.

“Many businesses already had a surcharge arrangement in place before mid-February, set against a baseline from some earlier point. Working out the correct position now – accounting for the excise changes, the road user charge removal, and the specific freight task – is complicated and requires real expertise.”

Prological Consulting specialises in supply chain strategy, warehouse design and sourcing, as well as international and domestic freight strategy.

Read full report.