Invoicing for New Zealand Couriers’ products and service is comprised of product/service base prices, surcharges, and GST.
Our surcharges cover variable costs to our business that fluctuate and are outside of our control, such as fuel price. We chose not to embed these costs in the price of our products and services so that any reductions can then be passed along to our customers by decreasing the associated surcharge, and any increases are transparently communicated.
We utilise three different surcharges:
- Variable Fuel Factor (VFF)
- Road User Charges (RUC)
- Temporary Service Continuity Surcharge (TSCS)
Variable Fuel Factor (VFF)
The Variable Fuel Factor (VFF) was introduced for the purpose of providing for the increased costs in fuel, primarily diesel, to fairly compensate our couriers and line haul operators. We use a fuel adjustment factor as a pricing tool to ensure our customers only pay a “proportionate fuel cost”.
The VFF surcharge rate is updated every month and is based on average fuel prices from two months earlier. The two-month buffer allows customers to anticipate any pricing changes and accurately calculate their own courier costs and correctly invoice/onforward the courier charge to their customers (where relevant).
There are two different VFF’s within New Zealand Couriers:
- Domestic VFF (indexed to diesel prices)
- International VFF (indexed to jet kerosene spot prices)
Road User Charges (RUC)
Road User Charges (RUC) are a tax applied to users of vehicles which use a fuel not taxed at source, i.e. diesel fuel, administered by the New Zealand Transport Agency (NZTA) and enforced by the New Zealand Police.
Because our transport network mainly uses diesel-powered vehicles, Road User Charges add significant cost to our operations. In the past RUC had been a modest figure which we were able to absorb within our general operating costs. However, in 2015 the government significantly increased RUC (and have continued to increase) to such a point that we had to look at new ways of managing this cost.
Rather than concealing these increasing costs within rates increases, we have a separate RUC surcharge to cover a portion of these costs. We believe it is important to keep this as transparent as possible, as it is a cost that we as a business cannot control.
The RUC surcharge will not change on a monthly basis and will only be adjusted in line with publicly announced RUC changes.
Temporary Service Continuity Surcharge (TSCS)
The Temporary Service Continuity Surcharge (TSCS) was introduced in late 2016 as a mechanism for helping cover significantly increased operating expenses caused by unforeseen events, such as major earthquakes, that result in road closures and other restrictions to our delivery network.
We felt that adding a surcharge was a transparent method of sharing these unforeseen costs while providing the flexibility to adjust the figure accordingly based on conditions improving or worsening. It is a flat rate, which makes it easier for customers to understand the cost impact on business, as opposed to complex route-based permutations.
The TSCS surcharge is only implemented when necessary and may remain at 0% until such time as conditions require.
How total price is calculated
The total price you pay for New Zealand Couriers products/services is comprised of four components –the base price and our three surcharges (RUC, TSCS, and VFF)
Base price + (base price x VFF) + (base price x RUC) + (base price x TSCS) = Total price + GST
For example, if a ticket base price is $10.00, RUC is 2%, TSCS is 0.9%, and the VFF for the month is 2.7%, the total price would be $10.56 +GST.