Variable Fuel Rate (VFR)

Why a variable fuel rate?

Fuel is one of the most significant and fluctuating costs in transport. A Variable Fuel Rate lets this cost move while your base freight rates stay the same. The VFR was introduced effective 1 July 2017, and it has real advantages for your business:

• Your VFR and freight rates are separate, so rates don’t need renegotiating every time fuel prices change
• Fuel built into freight rates tends to be set higher to allow for inflation — keeping it separate means you benefit when fuel prices fall
• When the price of fuel decreases, so does your VFR
• The rates are transparent and published, so you can always see how your price is calculated

Two-month lag

To calculate the VFR for the current month we use the Index from two months earlier. For example, the July VFR uses the Index price from May.

Average diesel price

The Ministry of Business, Innovation & Employment (MBIE) publishes the Weekly Oil Price Monitoring tables. The VFR uses the ‘Average diesel main port price less taxes, levies and ETS (Emissions Trading Scheme)’. At the beginning of each month the VFR is calculated from the average price of diesel.

When is the VFR applied?

As of 1 July 2017, the VFR uses a Baseline Diesel (Index) price of $1.05. The VFR applies when the price moves $0.01 above the $1.05 Index price. If the average diesel price for the month is $1.05 or below, no VFR applies that month.

Are there any other charges?

Please refer to our terms and conditions. Part of the monthly variable charge includes a small charge that helps cover further insurance.