- Q: What is a Flexible Fuel Factor (FFF)?
A: The total price you pay for a courier product/service will comprise of two components - the base price and flexible fuel factor. Multiplying the base price by the flexible fuel factor then add this figure to the original base price will give the total price.
For example:
| If a ticket costs $10.00 and the FFF for the month is 2.70%, then: |
| Base price |
+ |
(base price x FFF) |
= |
Total Price |
+ |
GST |
| $10.00 |
+ |
($10.00 x 2.70%) |
= |
$10.27 |
+ |
GST |
| |
|
FFF |
= |
$0.27 |
+ |
GST |
The fuel adjustment factor was introduced for the purpose of recovering the increased costs to fuel, primarily diesel, to fairly compensate our contractors, line haul operators and where relevant, to cover increased airfreight and ferry fuel costs.
- Q: What does "base rate" mean?
The "base rate" is the threshold at which an FFF will start to be charged on your courier products/services.
- Q: What is the "base rate" at which I will be charged an FFF?
Domestic Courier Rates - The base rate is $1.20 (this is based on average diesel pump price inclusive of GST). We calculate the FFF for any given month using the averge diesel prices from two months earlier. For every 1c movement in the average pump price, our rates will move by +/- 0.1% (click here to see the "Flexible Fuel Factor Increase Table")
International Courier Rates - The costs of our international services are strongly impacted by the cost of jet kerosene and the flexible fuel factor will be dictated by our international partners (with jet kerosene being a key factor). This figure is adjusted monthly. Please click here for specific information on our international FFF.
- Q: Has the base rate changed at any point?
-
The domestic base rate was originally (August 2008) set at $1.51 - from July 2009 a base rate of $1.20 will apply. The international base rate has not moved since it was set in August 2008.
- Q: Why did the domestic base rate change?
-
The price of fuel fluctuated significantly in 2008. Much of the increased costs attributable to fuel pricing movement were not offset by the initial FFF base rate. We have reset the rate to maintain transparency as to our cost structure, rather than imposing a series of price hikes when/if fuel costs increase. By doing this, we have a mechanism in place that our customers benefit from in those times when fuel costs are lower.
- Q: How do I find out the current rate?
A: Our website will be updated each month detailing the increase/decrease for that month. You can find the current rate here at the top of the Flexible Fuel Factor page.
- Q: How will the FFF appear on my invoice/statement?
A: We will include the FFF in the price of every product/service listed on your invoice/statement. This allows you complete visibility as to the total price of each item.
- Q: How often will the FFF be reviewed?
-
A: We will review the average price of fuel each month. If the pump price of fuel fluctuates, our FFF will rise and fall in line with fuel prices. The FFF mechanism can be reviewed if New Zealand Couriers believes that business conditions require this.
- Q: How do I manage this increase within my business?
-
A: We will implement a two month lag to try and provide a buffer in regard to the latest increases, our base rate is the diesel pump price of $1.20c per litre (incl GST). The rate for each subsequent month will be based on the average price two months prior.
- Q: How long will the FFF apply to my account for?
-
A: Should prices drop below our base rate of the diesel pump price of $1.20c per litre (incl GST), the FFF will revert to 0% (after the two month buffer).
- Q: What has happened with the price of diesel?
A: To view the "Diesel Retail Price Graph Data" tables as published by the Ministry of Economic Development go to the Ministry’s website here, this shows the average weekly diesel price in New Zealand.
At the time of first looking to implement the FFF (July 2008), diesel prices had risen by 85% over the previous year.
- Q: Why a different FFF for domestic Courier Services and International Courier Services?
A: In terms of fuel, the greatest impact on our domestic courier network (ie within NZ) comes from movement in diesel prices, the greatest impact on our international courier network (ie exports/imports to/from NZ)comes from movement in jet kerosene prices.
Movements in diesel and jet kerosene prices are not always directly aligned - the purpose of the FFF is purely to pass on incremental costs, not increase margin, by creating two separate FFF's we can offer our customers increased transparency.
- Q: How does the Emissions Trading Scheme impact the FFF?
A: The New Zealand Emissions Trading Scheme (ETS) is part of the Government’s primary response to global climate change. Effective 1st July 2010 an additional tax will be applied to fuel, and passed on through the pump price.
When the "at the pump" price of diesel exceeds S1.20 including GST our FFF is activated (the ETS tax will be included in the “at the pump price”). This means that if fuel prices are close to or above $1.20, the ETS will increase the FFF. If diesel prices are $1.20 or less including the ETS component, the FFF will be
0% (no cost to customer).
For more information on the ETS visit www.climatechange.govt.nz/emissions-trading-scheme.
