Fuel LevyCalculator

What we changed: The base diesel price is now calculated from the entire available AIP record, from January 2004 to the present, rather than a fixed five-year window. It is the average of the lowest daily price in every calendar month across that whole period, currently around $1.20/L (ex GST). The figure is recalculated automatically each week as new data is published, so it always reflects the complete record with no manual input. The exact live value is shown in the base diesel price panel above.

Why: A five-year window meant choosing a start and an end date, and any such choice can be questioned. Using the entire record removes that discretion entirely. There is no window to argue about, the calculation spans every price cycle since 2004, and anyone with the public AIP data can reproduce the exact figure. It is the most transparent and defensible basis available, and it sits below the previous $1.2698 base.

A note on drift: Because the base reflects all available data, it moves very slightly over time as new months are added, by roughly a cent a year. That is deliberate. The base stays a living long-run reference rather than a number frozen on a single date.

What we heard: Using a 5-year average of all daily diesel prices places the base in the middle of the price range. By definition, roughly half of all trading days will sit below that average, producing a 0% levy. Transport operators told us this does not reflect commercial reality. Fuel is always a cost, and most carriers build in a levy even when prices are relatively low.

What we considered: We tested several approaches including using weekly minimums, longer historical windows, and different financial year combinations. Taking the lowest month in each period and averaging those anchors the base to the low side of the market rather than its midpoint.

What we changed: We first moved from the original $1.4037 base to the average of monthly minimums, then extended that from a fixed five-year window to the entire available record (see the June 2026 update above). The current base is around $1.20/L (ex GST), well below the original figure and anchored to the realistic lower bound of Australian diesel pricing.

What we heard: Even with a lower base, there will be periods when diesel falls close to or below the base price and the formula produces 0%. Carriers told us this is not how the industry works. Fuel is always a cost component of every freight movement, and most operators maintain a minimum levy regardless of market conditions.

What we considered: A symmetrical model where the levy can go negative (a credit when fuel is cheap) is theoretically fair but commercially unworkable. Operators do not give fuel credits and customers do not expect them. A floor is both practical and honest.

What we changed: We introduced a minimum floor levy that applies whenever the formula result falls below it. The floor is 2% for local freight, 3% for regional, and 5% for interstate. These floors reflect the minimum fuel cost exposure of each freight type regardless of market price. When diesel rises and the formula produces a result above the floor, the formula applies as normal.

The floor percentages are deliberately modest. On a $1,000 freight charge, the interstate floor levy is $50. We chose numbers that are commercially meaningful without being aggressive. The floors are scaled by freight type for the same reason as the fuel cost factors: interstate linehaul is more fuel-intensive than local metro delivery, so the floor reflects that higher dependency.

They are not industry-regulated numbers. They are a considered judgment based on operator feedback and typical fleet economics. We would welcome further industry input on whether these levels feel right in practice.

Earlier versions used a fixed five-year window, July 2018 to June 2023. That window did capture a full range of conditions, but it required us to choose where the window started and stopped, and to justify excluding more recent years. Any fixed window invites that question.

Using the entire available record from 2004 removes the choice altogether. It spans every major cycle: pre-COVID pricing, the 2015 to 2017 oil-price lows, the COVID demand collapse, the post-COVID recovery, and the Ukraine-driven spike. Because we take only the lowest month in each period and average those, the base reflects the long-run floor of the market rather than its midpoint.

The methodology is reviewed periodically, with the next scheduled review at the end of FY2026-27, but the base figure itself now updates automatically from the data and needs no manual revision.

No, and we want to be clear about that. Every operator has a different cost structure, fleet type, route mix, and customer base. This model is designed to be a transparent, data-driven reference point, not a one-size-fits-all solution. Some operators will have higher fuel exposure than these factors suggest; others will have lower.

What we offer is a methodology that is publicly documented, built on independent AIP data, and open to scrutiny. If you think something should be different, we genuinely want to hear from you. Use the contact details below or reach out via LinkedIn.

What the research says: Multiple independent sources, including Transport Intelligence, the Australian Trucking Association, and fleet industry publications, consistently estimate that fuel accounts for approximately 20 to 30% of total road freight operating costs across the industry. This range is widely cited and reflects the overall fleet mix of metro, regional and interstate operations combined.

Why the factors differ by freight type: The 20 to 30% range is a broad industry average that obscures meaningful differences between service types. Local and metro freight involves frequent stops, significant idle time in traffic, and high labour cost relative to kilometres travelled. In that context, fuel is a smaller share of total operating cost. Interstate linehaul involves continuous highway driving over hundreds or thousands of kilometres, with fuel becoming the dominant variable cost on each run. A B-double running Sydney to Melbourne at current diesel prices will burn roughly $900 to $1,300 in fuel on a single leg, which can represent 30 to 40% of the total operating cost of that movement.

Our specific factors: The local factor of 20% sits at the lower bound of the published range and is well supported by industry data for stop-start metro operations. The regional factor of 30% sits at the top of the published range, reflecting the greater distance dependency of regional freight. The interstate factor of 40% sits above the published average range and reflects the fuel intensity of dedicated linehaul operations. We acknowledge that 40% is towards the upper end and will not reflect every operator's experience, particularly those running lighter vehicles or shorter interstate corridors.

Our position: These factors are based on the best publicly available data we could find, combined with feedback from transport operators. They are designed to be directionally accurate for the freight types described, not to precisely match any individual operator's cost structure. If your fuel cost share differs materially from these figures, the methodology section explains how to interpret the levies in the context of your own operation. We welcome further industry data that could help refine these numbers in a future version.