How is the Fuel Levy calculated? | Cochrane’s Skip to main content

How is the Fuel Levy calculated?

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:

  1.  Determine current price of diesel (CDP)
  2. Calculate the difference between current and base diesel price.
    • Change from base diesel price = CDP – BDP 
  3. Calculate the percentage change from base diesel price.
    • % Change from base diesel price = ( CDP – BDP ) / BDP
  4. 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.