Three Simple Data-Driven Fuel Hedging Strategies for Market Stability

When data indicates the potential for increased market volatility, leaders in procurement, finance, and commodity risk management must navigate uncertainty with a plan. Fuel hedging is a strategic tool shippers use to help defend transportation budgets and ensure certainty in unpredictable markets. In this guide, we'll break down fuel hedging and risk management strategies shippers are using to mitigate energy market uncertainty and how you can leverage a fuel price risk management solution to support your transportation network.

Understand fuel hedging

Fuel price risk management involves developing and executing a plan to help shippers manage price risk associated with consuming fuel in their network. Shippers may choose to hedge fuel consumption to further define fuel spend. While a shipper may not be the one procuring fuel, they can still hedge their exposure to the fuel price and pay carriers a market-based fuel reimbursement through Fuel Recovery. This provides shippers with a firm understanding and fixed price on their fuel expenditure, no matter what is happening in the market.

Diesel fuel market volatility factors

Various macroeconomic and geopolitical factors are currently influencing global diesel fuel supply and demand, affecting prices. March brought momentary relief with a notable decline in average wholesale diesel prices, dropping to 305.3¢/gal—15.4¢/gal lower than February. This trend continued into April where average wholesale diesel prices dropped another 6.4¢/gal in March.  A few recent highlights below from a broader perspective:

• OPEC+ Production Adjustments: The first production increase from OPEC+ since July 2022 raised concerns about oversupply, pushing crude prices even lower.
• Macroeconomic Challenges: U.S. tariffs on countries purchasing Venezuelan crude, ongoing sanctions on Iranian and Russian crude, and economic uncertainty have tempered energy demand projections.
• Supply Dynamics: A substantial U.S. distillate inventory draw of 6.1 million barrels offset crude stock builds.

These fluctuating supply-demand fundamentals, compounded by geopolitical tension and evolving policies, emphasize the critical need for a disciplined, data-driven fuel hedging and risk management strategy. Through unbiased market expertise trusted by industry-leading shippers and proactive risk management, shippers can mitigate market exposure, stabilize costs, and maintain a competitive operational advantage.

Proven fuel hedging and risk management strategies

“Are other shippers hedging diesel exposure right now?” This is a common question in boardrooms today, but industry-leading organizations share one key trait—they don’t let market noise dictate their actions. Instead, they rely on a structured, data-driven fuel price risk management strategy to navigate market volatility with confidence.

Three fuel hedging strategies Breakthrough is seeing:

1. Adhere to plan: A well-designed fuel hedging and risk management plan can be a valuable tool and serve as a roadmap during periods of uncertainty. The execution of that plan can help mitigate distracting headlines and maintain strategic alignment to your organization’s risk tolerance.
2. Capitalize on favorable prices: When the market presents an opportunity, act decisively. Locking in a known fuel price ensures stability in your fuel expenditure.
3. Expand your planning horizon: If your current strategy covers just 6 months, review the outlook for 12–18 months. This can help mitigate short-term volatility and positions you to take advantage of longer-term pricing trends.

The takeaway? Success lies in having a structured fuel hedging and risk management plan—and the confidence to follow it.

Manage your transportation spend through a fuel hedging strategy

Markets are dynamic and having a plan to manage this uncertainty is essential for defending your transportation budget. T-Fuel, Breakthrough’s fuel risk management solution, turns uncertainty into a data-driven decision-making tool to support a cost-conscious, resilient transportation network.

You don’t need to hedge your entire fuel portfolio in one meeting. Start small, perhaps covering 5% of your fuel consumption or hedging diesel in a specific region. By focusing on what you can control, your organization will be in a stronger position to withstand diesel fuel market volatility.