Fuel is a significant cost factor for transport companies and the fuel levy provides a mechanism for the customer cost of transporting freight to fluctuate as fuel price increase and decrease. The charge for transporting freight is a combination of Freight Rates and Fuel Levy, with both set at a point in time.
The fuel levy calculation is:
- Determine current price of diesel (CDP)
- Calculate the difference between current and base diesel price.
- Change from base diesel price = CDP – BDP
- Calculate the percentage change from base diesel price.
- % Change from base diesel price = ( CDP – BDP ) / BDP
- Calculate the Fuel Levy.
- Fuel Levy = % Change from base diesel price divided by fuel factor (FF).
- Fuel Levy = ( ( CDP – BDP ) / BDP ) / FF
Where:
- Base Diesel Price (BDP): This is the diesel price at the time freight rates were originally established.
- Current Diesel Price (CDP): Set at the beginning of each month, this is the daily average over the previous month of the Adelaide Terminal Gate Price, as published by the Australian Institute of Petroleum.
- Fuel Factor (FF): 27% - reflects the fuel percentage of transport costs.