Impact of Diesel Price Increases on Malaysia’s Logistics Industry 2026

Malaysia’s logistics industry moves everything — food to supermarkets, parts to factories, goods to ports, parcels to doorsteps. And nearly all of it runs on diesel.

With diesel at RM3.35 per litre (subsidized) and RM5.52+ (unsubsidized) in 2026, the industry is dealing with a cost increase that touches every part of the supply chain. From the prime mover hauling containers in Port Klang to the delivery van dropping parcels in Petaling Jaya, higher diesel costs mean tighter margins across the board.

Logistics by the Numbers: How Big Is the Impact?

To understand the scale, consider that fuel typically accounts for 30 to 40 percent of a logistics company’s operating costs. When that cost component jumps by 56 percent (from RM2.15 to RM3.35) or nearly doubles (to RM5.52+), the effect on the bottom line is severe.

Example: A 10-lorry fleet averaging 4,000km per month per vehicle

Assuming average consumption of 30 litres per 100km:

	At RM2.15/litre	At RM3.35/litre	At RM5.52/litre
Diesel per lorry/month	1,200 litres	1,200 litres	1,200 litres
Cost per lorry/month	RM2,580	RM4,020	RM5,040
Fleet total (10 lorries)	RM25,800	RM40,200	RM50,400

The fleet is paying RM14,400 to RM24,600 more per month than before the subsidy rationalization. That’s RM172,800 to RM295,200 per year in additional fuel costs for a relatively modest fleet.

Last-Mile Delivery: Death by a Thousand Stops

Last-mile delivery has exploded in Malaysia, driven by e-commerce growth. Companies running fleets of vans and small lorries for parcel delivery face a particular challenge: urban delivery driving is fuel-inefficient.

Stop-start driving, idling at delivery points, navigating narrow residential streets, and circling for parking all increase fuel consumption per kilometre compared to highway driving. A delivery van covering 150km daily in urban areas might consume 35 to 45 litres of diesel — more than the same van would use covering 150km on a highway.

Daily fuel cost for a delivery van (40 litres/day):

• At RM2.15: RM86
• At RM3.35: RM134
• At RM5.52: RM168

That’s an extra RM48 to RM82 per van per day. For a last-mile operator running 20 vans, the monthly increase is between RM24,960 and RM42,640.

The pressure is intense because last-mile delivery rates are highly competitive. E-commerce platforms and their customers expect low delivery costs. Passing the full diesel increase to customers risks losing contracts to competitors.

Warehouse-to-Warehouse: The Middle of the Chain

Medium-haul logistics — moving goods between warehouses, distribution centres, and regional hubs — forms the backbone of Malaysia’s supply chain. These routes typically cover 100 to 500km and use medium to heavy lorries.

A 10-tonne lorry running a regular Kuala Lumpur to Johor Bahru route (roughly 330km one way) consumes about 100 litres of diesel per trip. The return leg adds another 100 litres.

Cost per round trip (200 litres):

• At RM2.15: RM430
• At RM3.35: RM670
• At RM5.52: RM840

For a lorry making this trip three times per week, the monthly fuel increase is between RM2,880 and RM4,920 compared to the old rate.

Many warehouse-to-warehouse operators run on contract rates that were negotiated before diesel prices increased. Renegotiating these contracts is necessary but difficult — customers are dealing with their own cost pressures and resist price increases.

Cross-Border Transport: Double the Complexity

Malaysia’s logistics industry handles significant cross-border traffic, particularly to Singapore and Thailand. Cross-border operators face unique challenges:

Singapore routes: Prime movers hauling containers between Malaysian ports and Singapore cover relatively short distances but face heavy traffic and long waiting times at checkpoints. Idling in queues burns diesel without covering distance, and the cumulative cost adds up.

Thailand routes: Longer-haul routes to southern Thailand involve more kilometres and therefore more diesel. A prime mover running Penang to Hat Yai and back might use 300 to 400 litres per round trip.

Cross-border operators also deal with different fuel prices in different countries and may not always be able to refuel at the most economical location. Planning fuel stops strategically has become a more important skill than ever.

The Ripple Effect Through Supply Chains

Higher logistics costs don’t stay within the logistics industry — they ripple through every business that ships or receives goods.

When a manufacturer in Shah Alam pays more to ship products to customers in Penang, that cost gets built into product prices. When a retailer pays more for deliveries from a distribution centre, shelf prices eventually rise.

This means logistics operators face pressure from both directions: their costs are going up, and their customers are resisting price increases because they’re dealing with their own cost pressures.

The companies that navigate this best are those with strong relationships with their customers, transparent cost breakdowns, and the operational efficiency to minimize waste.

Cash Flow: The Hidden Crisis

For many logistics businesses, the biggest threat isn’t reduced profit — it’s cash flow timing.

Diesel is paid for immediately or weekly. But many logistics customers pay on 30, 60, or even 90-day terms. When your fuel bill jumps by RM15,000 to RM25,000 per month, you need that extra cash available now, even though the revenue to cover it won’t arrive for one to three months.

This cash flow gap is where businesses get into trouble. They might delay vehicle maintenance, postpone fleet replacements, or struggle to meet payroll — all because the timing of expenses and revenue doesn’t match.

Strategies That Actually Help

1. Apply for SKDS 2.0 immediately

If your commercial vehicles aren’t registered with the Sistem Kad Diesel Subsidi, you’re paying RM5.52+ instead of RM3.35. That difference of RM0.85+ per litre multiplied across your fleet adds up to thousands monthly.

2. Review your route planning

Modern route optimization can reduce total kilometres driven by 10 to 20 percent. For a fleet burning RM40,000 of diesel monthly, a 15% reduction in distance saves RM6,000 per month.

3. Track fuel consumption per vehicle

Some vehicles in your fleet are consuming significantly more than others. Identifying the worst performers lets you prioritize maintenance or replacement. A lorry consuming 35 litres per 100km versus one consuming 28 litres per 100km costs you RM2,345 extra per 10,000km at RM3.35 per litre.

4. Finance fleet additions and replacements

When cash is tight, paying RM150,000 to RM300,000 upfront for a lorry doesn’t make sense. Financing the purchase — even with 0% deposit — lets you add capacity or replace inefficient vehicles while keeping cash available for fuel and operations.

5. Renegotiate contracts with data

Show your customers the actual cost breakdown. When you can demonstrate that fuel now represents 38% of your operating cost versus 28% before, reasonable customers will accept some price adjustment.

Financing for Logistics Operators

Ing Heng Credit has been financing equipment and vehicles for Malaysian businesses since 1985 — over 40 years. We’re KPKT licensed and have worked with more than 4,000 customers, many of them in the logistics sector.

We finance used and older vehicles because we understand that a well-maintained second-hand lorry is often the smart choice for a growing logistics business. With 0% deposit available, you can expand or renew your fleet without depleting the cash reserves you need for daily operations.

Looking Ahead

Diesel prices in Malaysia reflect a global trend toward subsidy rationalization. Operators who plan for sustained higher fuel costs — rather than waiting for prices to drop — will be the ones who survive and grow.

The logistics industry is essential to Malaysia’s economy. The businesses within it need to be equally essential in their approach to managing costs, maintaining cash flow, and investing in their fleets strategically.

Need Help Managing Cash Flow?

Cash flow tight with rising diesel costs? We finance equipment for businesses like yours:

• Old or used equipment? We finance that
• Flexible repayment terms
• 0% deposit available

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