Between April and August 2026, fuel excise moved from 52.6c to 20.6c to 36.6c to 53.7c/L.
Operators who repriced in April are now 33.1c/L behind. Operators who never repriced at all have absorbed the entire swing in margin.
Here is how to fix it without losing the contract.
Surcharge beats base rate
If you take one thing from this page: a fuel surcharge tied to a published index is far easier to get accepted than a base rate increase.
Three reasons customers say yes to one and fight the other:
It is visibly outside your control. A published index is not your opinion.
It is symmetrical. It falls when fuel falls. That is the sentence that closes the conversation — you are not asking for a permanent increase, you are asking to stop absorbing volatility.
It is separable. It does not touch the rate they benchmarked you on, which matters for procurement teams whose KPI is the base rate.
How to structure it
Pick a public index. The AIP national average diesel price, or your state’s terminal gate price. Published, verifiable, not yours.
Set a baseline. The index level at which the surcharge is zero — usually the price assumed in your current rates.
Set a step. For example, 1% surcharge per 5c/L above baseline. Simple enough to explain in a sentence.
Set a review period. Monthly is standard. Weekly reads as unstable; quarterly leaves you exposed.
Publish the formula. Send customers the mechanism, not just the number. Transparency here converts an argument into arithmetic.
The conversation
“Excise went back to the full rate on 3 August — 53.7c a litre, up 17.1c from July and above where it was before the disruption started. We’ve absorbed the swing since April but we can’t carry it indefinitely.
Rather than raise base rates, we’d like to apply a fuel surcharge linked to the AIP national diesel average, reviewed monthly. Here’s the formula. It moves down as well as up.
Happy to walk through it.”
Specific, verifiable, symmetrical, and it does not ask them to accept a permanent change.
Fixed-price contracts signed before March 2026
These were priced in a different economy. Quantify the exposure now rather than discovering it at year end.
For each: original rate, current cost per kilometre, remaining term, and total exposure at today’s costs.
If there is a rise-and-fall clause, check whether you are actually claiming under it. A surprising number of operators hold the clause and never invoke it because the conversation is awkward. That is margin you already negotiated and are giving back.
If there is no clause, you have three options: absorb it and know the number, seek a variation, or plan not to renew. All three are decisions. Absorbing it without knowing the number is not.
Know your actual cost first
None of this works without a current cost per kilometre — fuel, maintenance, tyres, registration, insurance, finance, depreciation and driver time, plus overhead.
For a heavy rigid at 80,000km a year, that lands around $3.44/km all-in.
If you are quoting from a number built two years ago and adjusted by feel, you are negotiating blind.
→ Cost per kilometre: the only number that matters
What else moved
Award rates +4.75% and minimum wage +5.97% from 1 July 2026 — driver costs rose alongside fuel.
Payday Super from 1 July moved superannuation from quarterly to every pay run, compressing the cash cycle in a sector already paid in 24.1 days on average, 6.9 days late.
Interest costs up 36.3% since March 2020, with the cash rate at 4.35% — relevant for anyone financing equipment.
Fuel is the visible one. It is not the only one.
Where to go next
- Cost Per Kilometre\n- Fuel Excise Cost Calculator\n- How to Raise Prices Without Losing Customers\n- Business Cash Flow in Australia
Sources: Department of Infrastructure fuel excise fact sheet; Australian Institute of Petroleum; Fair Work Commission Annual Wage Review 2026; ASBFEO Small Business Data Portal March quarter 2026; RBA Statement on Monetary Policy May 2026. General information, not commercial or legal advice — review your contract terms before varying rates.