On April 29, Fair Work Australia handed down the 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.
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, all equalling 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 pushing the excise discount and the increased diesel fuel credit to a combined level of 52.6 cents per litre at the beginning of March.
Impacts on a small articulated fleet
Table one reflects the impacts of a more than 80 per cent fuel price increase on a small articulated fleet. Holding all cost elements steady, except fuel, the impact on such a small fleet was an impost 25.5 per cent in total costs, 55.6 per cent – 30.1 per cent.
Table one: Common fleet consisting of 50 per cent Semi-trailer and 50 per cent 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; presented at the FWA hearings Contract Chain Order MS 2026/1
Diesel impacts on an owner driver
Owner drivers may be regarded as tier three operators who are mostly price takers and don’t have formal contracts or escalations built into their agreements or trip prices. Table two looks at the changes in an owner driver’s cost profile under three scenarios:
- Effective diesel fuel price is post GST and the diesel fuel credit of 19.2 cents per litre at December 31, 2025. Pump price at that baseline time was 180 c/litre
- Fuel has the usual relief of GST and diesel fuel credit of 20.2 cent/litre as at March 30, 2026. Pump price being 310 c/litre
- Fuel has relief through the 26.3 c/litre excise reduction and an increase in the fuel tax credit from 20.2 c/litre to 26.3 c/litre. Pump price in the last week of March hit 310 c/litre.
With no excise relief, the new owner driver cost profile would see a total cost impact of 33 per cent – 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 per cent. This is 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 two: 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 on the FWA Contract Chain Order hearings in April 2026
The CILTA expert report that detailed operator impact calculations was considered highly significant in the FWA’s final decision handed down on April 20, 2026.