Which of the following most directly impacts distribution costs?

Fuel prices most directly impact distribution costs because they represent a significant expense in the logistics and transportation sectors. When fuel prices rise, logistics companies face higher operating costs, which can lead to increased freight rates. This impact is felt throughout the supply chain, as the cost to transport goods from manufacturers to retailers or customers is directly influenced by fuel expenses.

In contrast, while employee productivity, market demand, and product design can influence overall supply chain effectiveness and efficiency, they do not have the same direct and immediate effect on the costs associated with distribution. Employee productivity can affect operational costs, but this is more indirect. Market demand shapes the volume of goods that need to be distributed, and product design can impact packaging and handling, but neither has the same direct correlation to distribution costs as fluctuations in fuel prices do.