This month, Kenyans got a real shock when the Energy and Petroleum Regulatory Authority announced its review of petroleum products for the period of April 16 to May 14, 2026.
Their announcement was to the effect that the price of super petrol in Nairobi would surge by over Sh28 per liter, while diesel, which is the lifeblood of freight business, was to jump by a record Sh40.
Thankfully, the government intervened to reduce the Value Added Tax (VAT) on petroleum products, from 13 percent to 8 percent. This prompted a downward revision of fuel prices following that initial sharp increase.
For logistics firms already operating on razor-thin margins, the message sent by the fuel price scare cannot be any clearer - volatility is the new normal. Yet crisis can breed opportunity. The possible spike in fuel prices should not just come as a cautionary tale but signal for our firms to build supply chains that are not merely reactive, but resilient.
The threat of a looming fuel shock did not emerge in a vacuum. Kenya’s logistics sector is battered by multiple, interlocking forces of volatility. Geopolitically, the ongoing conflict involving Iran has tightened global oil supplies and disrupted key maritime choke-points such as the Strait of Hormuz, through which a quarter of the world’s fuel passes. Higher international crude prices and elevated shipping insurance premiums have driven up landed costs in Mombasa.
Global supply chain disruptions, marked by rerouted vessels, port congestion, and shipment delays, continue to exert pressure on trade. Domestically, currency and broader economic factors amplify these external shocks.
While a weaker shilling can increase import costs and contribute to inflation, recent currency stability has helped moderate the impact. Nonetheless, businesses still face elevated transport costs, fluctuating inventory levels, and ongoing strain across supply chains driven by pricing uncertainty.
While local firms cannot control oil prices or geopolitical developments in Iran and the broader Middle East, they can determine how they respond to the resulting instability. Building resilience begins with diversification.
Many Kenyan businesses still rely heavily on a single import mode of transport. However, forward-looking firms should consider adopting multi-modal logistics strategies to enhance flexibility and reduce risk.
Currently Kenya’s internet bandwidth is experiencing rapid growth characterised by high utilisation and increasing 4G/5G penetration. This is the time when technology is an indispensable tool and those who utilise it will stay ahead of the curve.
Real-time visibility is no longer a luxury. GPS tracking, Internet of Things sensors and AI-driven predictive analytics can forecast fuel-price spikes, optimise routes and minimise idle time.
Disruptions such as the recent fuel price rise have shown us that we need to rethink our adoption of various financial tools.
Strategies like financial hedging must become standard practice. Fuel-price volatility can be partially neutralised through futures contracts or index-linked supplier agreements that share risk fairly between shippers and carriers.
Similarly, forward foreign-exchange contracts can help manage residual currency risks on imported spares and fuel, even as the shilling shows signs of stabilisation. Smaller firms can access these instruments through industry cooperatives or the Nairobi Securities Exchange’s derivatives market.
The government, on its part, can support this shift by fast-tracking regulatory approval for logistics-specific hedging products and offering partial guarantees for micro, small, and medium enterprises (MSMEs)
Furthermore, fleet modernisation offers a longer-term hedge. Kenya’s truck fleet is largely ageing. Transitioning to Euro-VI compliant engines, aerodynamic retrofits and hybrid or electric options for urban and short-haul routes slashes consumption.
If we pair this with driver training in eco-driving techniques, we will definitely see the gains multiply. We also need to introduce multi-sourcing by maintaining relationships with suppliers in the Middle East, Asia and even intra-African partners under AfCFTA to prevent single-point failures.
All said and done, none of this can happen in isolation. Public-private collaboration is essential. The government has already signaled willingness to cushion shocks and should now accelerate infrastructure projects like road upgrade along the northern corridor to Malaba dry ports and digital customs clearance to lower baseline logistics costs.
Tax incentives for green fleet upgrades and skills programs for logistics professionals would amplify private investment. Industry associations must also push for these measures while sharing best practices across the sector.
Today, Kenyan logistics firms stand at a crossroads. The current market volatility is painful, but it is also a loud alarm. Those who cling to old models of low-tech, road-only, reactive operations will bleed margin and market share.
Those who embrace diversification, digitalisation, financial sophistication and collaboration will emerge stronger by not just surviving volatility but thriving on it. They will deliver goods faster, cheaper and greener, positioning Kenya as East Africa’s undisputed logistics gateway.
Overall, the road ahead is uncertain but the destination is not. Resilient supply chains are not built in calm seas; they are forged in the storms we face today.
Kenyan logistics leaders must act now with courage, creativity and capital to secure the arteries that keep our economy alive. Even though the alternative offered by the current market volatility looks like stagnation, on the flip side, the opportunity is leadership.
The writer is the CEO & Managing Director, Siginon Group.
