Message from CEO
Further to my message on Friday in our Transporter E-News, and due to the amount of calls of concern we are receiving from members, we are providing you with further information in relation to applying a fuel surcharge. One of our key purposes is to ensure that you are able to operate your business in an efficient, productive and viable way, and we do our very best to do that with practical solutions and timely support.
Applying an additional percentage to your fuel levy in this current climate is not attempting to improve profit margins, but to recover the actual extra cost of fuel. In normal trading conditions, we understand businesses have a practice of reviewing the fuel levy on a monthly/quarterly basis, however, it is recommended that in the current climate that a weekly review be done to ensure you are passing on these additional fuel costs.
Importantly, you need to take quick action because as you know the cost recovery for these fuel price increases will significantly impact business viabliliy. As fuel market volatility is likely to be continuing for some time, we recommend that this surcharge percentage is reviewed weekly.
We also recommend to get professional advice from an accountant that specialises in transport accounting. If you need a referal, please contact us.
Gary
How to apply an increase in fuel levy or add a fuel surcharge?
1. Apply your normal fuel levy and then add a percentage for the fuel surcharge on top of that.
2. Adjust your existing fuel levy to include the extra percentage as an all in one figure.
3. If you don't currently charge a fuel levy, the calculation will be a single percentage figure.
How to calculate?
We recommend contacting your accountant or using a fuel levy calculator to obtain a reliable figure.
Freight Metrics has been recommended.
Having the conversation
To assist in introducing a fuel surcharge or any price increase, often the hardest barrier to overcome is actually having the conversation and communicating with your customers. The key here is equipping yourself with the information and knowledge to communicate the what, why and how. For many, this may already be a part of your business practices, however, for those who are unsure how to approach this, we offer the following links to tips that may be helpful.
Please note, this is generic information and not intended to be specific to the application of the fuel surcharge.
Price Increase Conversation
You've decided to raise your rates - how do you tell your clients
10 Secrets to having raising-prices conversation
Template for communication
Letter to customers to advise of increase to fuel levy - can be adjusted according your business situation.