Fuel costs are understandably one of the most significant and variable cost components in the transport industry worldwide. As with other courier providers, our 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 and to ensure transparency in our pricing. We use a fuel adjustment factor as a pricing tool to ensure you only pay a “proportionate fuel cost”.
By using this surcharge mechanism, we can:
- Provide transparency for you to see how it is calculated
- Take into account any shifts in the price of fuel that impact significantly on the price of moving courier items
- Pass on any reductions, should the price of fuel decrease
- Give advanced notice of what the VFF will be a month in advance
VFF surcharge rates (Domestic and International) are updated every month on our website and are based on average fuel prices from two months earlier. The two-month buffer allows you to anticipate any pricing changes and accurately calculate your own courier costs and correctly invoice/onforward the courier charge to your customers (where relevant).
Our Domestic VFF surcharge rate is based on the average diesel price (adjusted for regional fuel taxes) from two months earlier. There is a trigger point of $0.95 cents (diesel retail price* including GST) at which VFF for domestic courier services is applied. Every 1c movement above $0.95 in the average retail pump price over a calendar month, results in a 0.1% increase in our service and product pricing.
*On 27th August 2018, the retail price as published by the Ministry of Business, Innovation and Employment was adjusted by $0.32 to account for the Auckland regional tax (Auckland Council implemented a $0.10/litre (excl GST) regional fuel tax on 1st July 2018)
International Courier Services are subject to a separate International Variable Fuel Factor because the greatest impact on our international courier network (ie exports/imports to/from New Zealand) comes from movement in jet kerosene prices, movements in diesel and jet kerosene prices are not always directly aligned - by creating two separate VFFs we provide increased transparency.
VFF rates are updated automatically on our monthly invoicing and are included in the price of the charges listed on invoices/statements, allowing complete visibility as to the total price of each item.
How does the VFF impact my on business /courier pricing?
There is a trigger point of $0.95 cents (diesel retail price including GST) at which VFF for domestic courier services is applied.
Every 1c movement above $0.95 in the average retail pump price over a calendar month, results in a 0.1% increase in our service and product pricing. This is updated monthly and will be automatically adjusted on your invoice.
International Courier Services will be subject to a separate Variable Fuel Factor2.
The rates for our Variable Fuel Factors will be recalculated on a monthly basis for the coming month so you are able to take this into account.
1Average diesel retail price (adjusted for regional fuel taxes) as published by the Ministry of Business, Innovation and Employment which they refer to as the "main port price". We will calculate the VFF for any given month using the average diesel retail price (adjusted for regional fuel taxes) from two months earlier.
2The costs of our international services are strongly impacted by the cost of jet kerosene, and as a result require a separate International VFF