On the 29th April Fair Work Australia handed down Road Transport Contract Chain Order – Fuel Cost Recovery -2026. This order allowed for full cost recovery for the impacts of fuel (diesel) increases on fleet costs.
Diesel prices surge
Toward the end of March diesel prices soared to $3.10 per and then even reached $3.30 per litre a fortnight later. This diesel fuel price hike triggered a heavy road transport emergency. On April 1 the federal government cut the fuel excise by 26.3 cents/litre, halving the excise rate. This allowed the effective cost to operators off a 330 c/litre pump price was (330-26.3) x (10/11) GST – 20.2, the Diesel Fuel Credit, equals 255.89 c/litre. However, this point was not reached immediately and this triggered a boost to the diesel fuel credit up from 20.2 c/litre to 26.3 c/litre effectively now pushing excise to zero.
Impacts on a small articulated fleet
Table 1 reflects the impacts of an 80%+ fuel price increase on a small articulated fleet. Holding all cost elements steady, excepting fuel, the impact on such a small fleet was an impost 25.5% in total costs.
Table 1: Common fleet consisting of 50% Semi-trailer and 50% B-Doubles.
| Driver + On-costs | Office | Fuel | AdBlue | Tyres | Mntce | Capital | Insur | Rego | Total |
| 28.8% | 9.6% | 30.1% | 1.4% | 6.6% | 7.7% | 9.3% | 4.5% | 2.0% | 100.0% |
| 28.8% | 9.6% | 55.6% | 1.4% | 6.6% | 7.7% | 9.3% | 4.5% | 2.0% | 125.5% |
Source: CILTA Expert report; FWA hearings Contract Chai Order MS 2026/1
Diesel impacts on an owner driver
Owner drivers may be regarded as tier 3 operators who are mostly price takers, who don’t have formal contracts or escalations built into their agreements or trip prices. Table 2 looks at the changes in an owner driver’s cost profile under three scenarios.
A. Effective diesel fuel price is post GST and the diesel fuel credit of 19.2 cents per litre at 31 December 2025. Pump price 180 c/litre
B. Fuel has relief of GST and diesel fuel credit of 20.2 cent/litre as at 30 March 2026. Pump price 310 c/litre
- Fuel has relief through 26.3 c/litre excise and an increase in the fuel tax credit from 20.2 c/litre to 26.3 c/litre. Pump price last week in March was 310 c/litre. (AIP Last week of March)
With no excise relief the new owner driver cost profile would see a total cost impact of 33%, totally unabsorbable. However, with excise halved and an increase in the Diesel Fuel Credit, Case C, the pain is reduced to a cost impact of 24.9%. Still horrendous unless these prices can be passed on.
This is where the FWA’s Contract Chain Order plays a very significant role. Negotiations can formally be entered into to recover the incurred costs, and to establish new trip rates.
Table 2: Cost profile changes of an owner driver through the diesel increase.
| Element | Component Costs | Fuel Basic (A) | No Relief (B) | Fuel Relief (C) |
| Driver Salary | Salary, Overtime, Allowances, Bonus | 29.2% | 29.2% | 29.2% |
| Driver On-costs | Superannuation, Rec leave, Long Service Leave, Sick Leave | 1.8 % | 1.8 % | 1.8 % |
| Office | Payroll Tax, Workcover, Purchasing Costs, Scheduling, Supervision, Training, HR, OH&S | 0.47 | 0.47% | 0.47% |
| Fuel | Ex GST, Ex Diesel Fuel Credit (excise relief for Option C. | 41.5% | 75.46% (+81.8%) | 66.5% (+60.2%) |
| AdBlue | Ex GST | 3.9% | 3.9% | 3.9% |
| Tyres | Variable depending on configuration and Trailers/dollies | 4.3% | 4.3% | 4.3% |
| Maintenance | Averaging A, B, C services | 6.4% | 6.4% | 6.4% |
| Capital | Depreciation and capital costs/ Lease costs and buyout | 7.6% | 7.6% | 7.6% |
| Insurance | Based on specific operations/ configuration and commodity carried | 3.7% | 3.7% | 3.7% |
| Registration | Based on Configuration and axle numbers | 1.2% | 1.2% | 1.2% |
| TOTAL | 100 % | 133.9% | 124.9% | |
| Impacts of fuel relief from 1 April 2026 Compare case B, no new relief versus case C | Base cost Dec 31 | 33.9% | 24.9% | |
Source: CILTA Expert report; FWA hearings Contract Chai Order MS 2026/1
As the impact of the GST implementation in 2000 generated educational programs for road transport operators it is time for the smaller, less powerful operators. to learn how to cost their operation, become familiar with agreement escalation clauses, and even how to use road transport cost indices where they exist.
Author: Dr Kim Hassall, CILTA, Expert report author FWA Contract Chain Order hearings April 2026