How does the fuel levy work? A transport company forwards a quotation to a customer, nominating a base rate, fuel price and what percentage of fuel is required to perform the work in the quoted price. This percentage of fuel cost is used to work out what the increase or decrease (due to fuel price fluctuations) may be to the quoted freight rate and the difference in cost is added (or subtracted) to the base rate as a fee called the Fuel Levy or Fuel Surcharge. The base rate is often linked to an equivalent fuel value of $1.00 per litre and adjusted using the fuel levy with the current fuel price to give today’s rate.
The freight rate is then automatically adjusted against the current fuel price which may be daily, weekly, or monthly depending on the agreement between the transport company and the customer.
The fuel price used will be determined by the transport company and will often be the average of the fuel price over the daily, weekly or monthly period.
NOTE: The fuel levy / surcharge calculator by Freight Metrics does not automatically update costs to reflect current prices. Please discuss the appropriate prices to use with the transport provider.
Calculation Function:
Calculation is: [(Current Fuel Cost) – (Base Fuel Cost)] / (Base Fuel Cost) x (Base Rate Fuel Percentage) = Fuel Levy %
Functions of: Base Rate Fuel % = (A), Base Fuel Cost = (B), Current Fuel Cost = (C),
Then: [(C – B) / B] x A = Fuel Levy %
Example: These values come from the corrected full Truck Operating Cost Calculator at its current inputs..
| Fuel Levy Calculator input | Value to enter | Where it comes from in the truck calculator |
|---|---|---|
| Freight rate per load or day | $1,931.07 | “Est. Charge per Day” at the base fuel price (Q206, hidden row 206) |
| Base rate fuel cost | $1.00 | Step 9 “Base Rate Fuel Price” (K169), entered as the pump price |
| Base rate fuel cost percentage | 20.55% | Fuel at the base pump price ÷ daily operating cost at the base fuel price |
| Current fuel cost (Step 2) | $2.53 | Step 1 “Current Fuel Cost” (K18), pump price |
Test results from the Fuel Levy Calculator:
| Current fuel price | Fuel levy calculator | Truck calculator |
|---|---|---|
| $2.53 | 31.44% levy, $2,538.21 rate | 31.44% levy, $2,538.20 Estimate Charge per Day |
| $3.00 | 41.10% levy, $2,724.73 rate | $2,724.71 (same model) |
The 1–2 cent differences come from the fuel % being rounded to 20.55%.
Test results from your Fuel Levy Calculator:
| Current fuel price | Fuel levy calculator | Truck calculator |
|---|---|---|
| $2.53 | 31.44% levy, $2,538.21 rate | 31.44% levy, $2,538.20 Estimate Charge per Day |
| $3.00 | 41.10% levy, $2,724.73 rate | $2,724.71 (same model) |
The 1–2 cent differences come from the fuel % being rounded to 20.55%.
Keep these three things consistent:
To work out your Base Rate Fuel Percentage use the Truck Operating Cost Calculator:
Using the pre-set figures in the Truck Operating Cost Calculator – Scroll down to the “Summary of Costs”:
See the Fuel Percentage used (23.4%) – use this figure in the fuel levy calculator as the “Fuel Percentage Used”
(Note this DOES NOT INCLUDE the rebate in your fuel levy calculation.)
Scroll down to the “Results”:
The Charge Rate Per Day in the freight rate cost estimate is used as the base rate figure in the calculator (indicated as $1694.20 if the preset figures in the calculator).
Fuel Levy Calculator:
Having a problem getting the truck cost calculator to correlate with the fuel levy calculator? It is most likely because you included the fuel rebate in the Truck Operating Cost but didn’t in the Fuel Levy Calculator – so deduct the fuel rebate from the “Current Fuel Cost” value in the fuel levy calculator. – see Example 2.
To work out your Base Rate Fuel Percentage use in the Truck Operating Cost Calculator:
Scroll down to the “Summary of Costs”:
See the Fuel percentage used (20.3%) – use this figure in the fuel levy calculator as the “Fuel Percentage Used”
(Note this INCLUDES the rebate in your fuel levy calculation.)
Scroll down to the “Results”:
The Charge Rate Per Day in the freight rate cost estimate is used as the base rate figure in the calculator (indicated as $1628.72 if the preset figures in the calculator are used with the fuel price at $1.00 less the rebate of $0.16500).
Fuel Levy Calculator:
Note: When including the fuel rebate in the Truck Operating Cost Calculator, the base fuel cost and base fuel cost percentage in the fuel levy calculator must also include the rebate if allowed in the calculation. Difference between the examples above is due to a round error in of the fuel cost per liter to 4 decimal places.
To be eligible for the fuel credit for diesel fuel use in heavy vehicles, the vehicles and vehicle fuel use must satisfy certain environmental criteria. The credit is used for the additional costs of capital and maintenance to meet the environmental criteria including the required reporting and administration. For these reasons, the fuel credit is not generally passed on to the customer.
For more information concerning the fuel credit – see the ATO (Australian Tax Office) website: www.ato.gov.au
Transport companies can and will alter the base rate, fuel base price and percentage of fuel to suit their operating costs. Each company depending on long haul / short haul, fuel buying power, vehicle types, fleet size, distribution and warehousing operations, and staffing will affect both the base rate and percentage of fuel used.
The Fuel levy figures are provided only for continuity with the figures shown in the Truck Operating Cost Calculator trial and do not represent a standardised operating cost. For transport operators / truck owners, consult with your financial advisor before using the preset figures in the fuel levy calculator.
