A fuel levy is a surcharge that gets added to your base freight charge. This freight fuel surcharge plays a key role in freight rates and can significantly impact your bottom line.
With rising diesel prices and transport cost volatility in 2025, it’s important to have a good understanding of fuel levies.
In this guide, we’ll cover what a fuel levy is, fuel levy calculation, and how we apply it fairly in the context of heavy haulage transport.
What Is a Fuel Levy and Why Do We Use It?
A fuel levy in Australia is a surcharge that gets added to base freight charges. This separate cost is applied to base freight charges to help carriers offset the cost of fuel.
The fuel levy aligns pricing with fuel fluctuations to ensure fairness for both customer and carrier.
How Fuel Levies Are Calculated
Monthly Diesel Price Benchmarks
The fuel surcharge is adjusted according to changes in the fuel market. This fuel levy surcharge can be adjusted daily, weekly, or monthly.
The Australian Institute of Petroleum (AIP) updates the diesel price index.
- If the diesel price index goes up, the fuel level surcharge increases.
- If the diesel price index goes down, the fuel level surcharge decreases.
View the Australian Institute of Petroleum (AIP) webpage to see average terminal gate prices.
Example Fuel Levy Calculation
Fuel levies are calculated as a percentage. The percentage is regularly updated to reflect market changes to a published fuel price index, such as the AIP.
Fuel levy calculation varies between carriers but generally follows the same formula:
- Fuel Levy % = ((Current Fuel Price – Base Fuel Price) ÷ Base Fuel Price) × Fuel Cost
Here is an example fuel levy calculation:
Rate = $2.00/L, current = $2.40/L → levy = (2.40–2.00)/2.00 × 100 = 20%
*Tip: Each carrier varies in freight fuel surcharge. Before entering a freight agreement, always obtain a written confirmation of a carrier’s fuel levy surcharge.
How We Communicate Fuel Levy Changes
When we provide you with a freight quote, we provide full transparency. You’ll never have a surprise fuel levy charge or unexpected fee. You’ll know the exact cost, including any fuel levy charges, up front.
We also keep our clients informed about any month to month changes in fuel levy surcharges. We understand it can be difficult to keep up with changing fuel levies, so we make sure to keep you updated.
Our team is available to explain how freight costs are broken down. We’re here to be your trusted partners, ensuring you make the best choice for your company to manage fuel levies.
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Managing Fuel Costs with Smarter Planning
Route Optimisation and Fleet Efficiency
Our team proactively plans efficient, fuel-conscious routes to ensure the most cost-efficient transport for your freight.
Learn more about how we plan efficient, fuel-conscious routes in our guide here: Interstate Transport.
Helping Clients Control Overall Costs
We know logistics costs can be a major expense for companies, often having a significant effect on the bottom line. Reducing these costs is often the difference between success and failure.
Beyond levies, we help clients plan loads more effectively to reduce cost per tonne. Our experienced logistics professionals are committed to reducing logistics costs and maximising efficiency to help your company succeed.
Read more about how we work to provide the most cost-efficient heavy haulage solutions here: How to Reduce Logistic Costs for Your Business.
Transparent Freight Pricing You Can Trust
At Australia Wide Haulage, you can trust we are committed to providing fair, our market-based fuel levies.
We keep our focus on transparency, cost-efficiency, and long-term partnerships. We partner with you to ensure you make the smartest, most cost-effective freight choices for your bottom line.
If you want to make sure you understand how the freight fuel surcharge will change your freight costs, we’re here to answer all your questions. We provide a clear view of how fuel levy pricing works and pride ourselves on our exceptional customer service.
If you have questions about the fuel levy surcharge and how we can deliver a cost-effective freight solution for your business, please contact us.
Fuel Levy FAQs
Do all freight companies charge a fuel levy?
No, not all freight companies in Australia charge a fuel levy. However, it is extremely common.
Why is the levy separate from the base freight rate?
A fuel levy surcharge is a separate cost that is added to the base cost of freight. By adding the fuel levy as a separate charge, carriers can manage the varying cost of fuel without adjusting their rate structure.
Why does the levy change monthly?
The Australian Institute of Petroleum (AIP) updates the diesel price index.
If the diesel price index goes up, the fuel level surcharge increases.
If the diesel price index goes down, the fuel level surcharge decreases.
How do I know the rate being used is fair?
Look for a freight partner that is happy to discuss any questions with you and fully transparent in their quotes and invoices.
Want a freight partner that keeps costs clear and fair? Talk to us about transparent fuel levy calculations and efficient heavy haulage services across Australia.
