What is a Fuel Adjustment Factor?Fuel costs are understandably one of the most significant and variable cost components in our business. The fuel adjustment factor was introduced for the purpose of recovering the increased costs to fuel, primarily diesel, to pass on to our contractors, linehaul operators and where relevant to cover increased airfreight and ferry costs. How often will the FAF be reviewed? The NOW Couriers fuel surcharge will be triggered at the price point of $1.20.9 cents per litre. We will review the price of fuel and the impact on our business each month. As the pump price of fuel fluctuates our FAF will rise and fall in line with fuel prices. See below:
| Month | NOW CouriersFuel Adjustment Factor (FAF)% to apply | Based onDiesel price(2 month lag) | | April 2010 | 0% | Price at pump 1st Feb 2010 $1.109 | | May 2010 | 0% | Price at pump 1st March 2010$1.118 | | June 2010 | 0% | Price at pump 1st April 2010$1.159 | | July 2010 | 1.4% | Price at pump 1st May 2010 plus Emissions Trading Scheme (ETS)$1.219 + $0.035 ETS | | August 2010 | 0% | Price at pump 1st June 2010$1.159 + $0.035 ETS | | September 2010 | 0.7% | Price at pump 1st July 2010$1.209 | | October 2010 | 0% | Price at pump 1st August$1.189 | | November 2010 | 0% | Price at pump 1st September$1.189 | | December 2010 | TBA 1st October | TBA 1st October |
Will I be notified of each increase? Our web site will be updated each month detailing the increase/decrease for that month. You can find this here in our "NEWS' section. How do I manage this increase within my business? We have implemented a two month lag to try and provide some relief to these latest increases and will base our rate for the month of July on the fuel price at 1st May 2010 ($1.21.9c per litre) plus the ETS that takes effect from 1st July 2010. The rate for each subsequent month will be based on the price two months prior. Will there be a non-fuel related increase this year as well? Our standard CPI linked increase will occur on the 1st October 2010. The Government has imposed further increases in various charges not to mention the Emissions Trading Scheme and the effect that is going to have on all our businesses. What has happened with the price of diesel? Diesel costs have fluctuated over the past year by as much as 30% over the price at the same time the prior year. How does the FAF change with the price of diesel? The following chart shows how the FAF percentage changes with the pump price of diesel. Forward planning. In line with our two month delay in reflecting the pump price of diesel you will be able to monitor it on our web site daily if you wish. The fuel surcharge will be instituted at the price point $1.20.9cpl. There will be a corresponding two month lag in it being instituted both in the upward levels and in it coming back to lower levels. 
|
