4 May 2026
Fuel Levy Update – May 4th 2026
The unprecedented sudden rise in fuel costs in Australia, especially diesel, has impacted freight significantly. There are high value, high margin goods where the freight costs can be easily absorbed without unduly impacting profitability. In the agricultural ingredient supply chain, margins are typically very low and the distances often travelled are significant. The use of freight inclusive (FIS) prices as the dominant pricing approach means that either price lists are routinely updated or a separate charge to cover the extraordinary rise in the fuel levy is taken. On some goods the additional charge to other states significantly exceeds the margin on the goods.
TFB Trading has chosen to separate out the recovery of this additional freight charge for two reasons:
- To avoid sending out a new price list each week and keep our monthly cycle
- To avoid locking in higher prices if we get price relief
4 May update: Brisbane, Sydney, Adelaide and Melbourne are holding steady at last week’s reduced levels. Perth has moved in the opposite direction, lifting from 42.04% to 44.28%. The reasons are explained below — Perth’s carrier schedule lags the eastern states and is now catching up to the late-April diesel benchmark peak.
What is happening with diesel prices
The national average diesel price climbed steeply through March 2026, peaking around 295¢/litre on 30 March. From 1 April the Federal Government halved the diesel excise (from 52.6¢ to 26.3¢/L) and reduced the heavy vehicle road user charge (HVIC) to zero, both temporary measures to 30 June. Wholesale terminal gate prices have since stabilised. As at Friday 1 May, BP’s diesel terminal gate prices were sitting at ~220¢/L in Sydney, ~223¢/L in Brisbane, ~219–221¢/L in Perth, and the AIP five-city average is in the $2.27–2.28/L range.
International gasoil (the underlying benchmark for Australian diesel) fell 1% in the week to 29 April after the much larger 18% drop the previous week. The picture is now one of stabilisation rather than further easing — prices are no longer rising sharply, but the structural premium remains in place and the underlying base fuel cost is still doing most of the work on the retail price.
The chart below shows the AIP five-city average diesel price broken into its components (base fuel, excise, HVIC, GST) across the cycle from end of February to today.
The five-city average has effectively flat-lined this past week at approximately 263¢/L (vs 259¢ on 27 Apr) — the easing trend has paused, not reversed.
Freight Cost by Destination — Levy % Trend
Brisbane, Sydney and Adelaide share the same carrier levy percentage, so they are grouped below. Perth and Melbourne each follow a different schedule. The line charts track the levy rate across nine fortnightly periods since end of February.
The 4 May adjustment shows a divergence between routes. Brisbane, Sydney, Adelaide and Melbourne are unchanged from 27 April — the carriers servicing those routes have held rates flat. Perth has lifted from 42.04% to 44.28%, an increase of 2.24 percentage points. The carrier servicing Perth uses a different review schedule and is reflecting late-April terminal gate prices, which had not yet eased materially in WA. We expect this to reverse in subsequent reviews if the eastern-states diesel softening flows through to Perth wholesale prices.
Bean Growers Australia: Fuel Levy Surcharge
For comparison, Bean Growers Australia has updated their extraordinary fuel levy surcharge applied to freight-inclusive pricing on deliveries from Kingaroy. The surcharge component is shown plus GST.
Tanker Traffic, Refining Capacity & the Medium-term Outlook
The fortnightly easing in domestic levy rates is welcome, but freight pricing is ultimately driven by what arrives at Australia’s ports — not what is signalled at terminal gates this week. The structural picture remains tight, and the supply equation has very little slack in it.
🚢 The Australian fuel supply equation Structural Risk
Australia imports roughly 90% of its refined petroleum, entirely on foreign-owned and foreign-crewed vessels. Domestic refining capacity has been cut to two operating facilities — Ampol’s Lytton plant in Brisbane and Viva Energy’s Geelong refinery — together supplying less than 20% of national demand. Geelong has had disruptions through this cycle and is expected to return to over 90% capacity in the next few weeks per PM&C.
Energy Minister Chris Bowen has confirmed 50–61 fuel-laden ships are en route, with arrivals expected to keep supplies stable through May. The composition of those arrivals is the more important detail: Singapore (which normally supplies ~55% of Australia’s petrol and ~15% of its diesel), South Korea and Malaysia have been hit by their own feedstock shortages and deferred at least six shipments to Australia in March. China and Thailand imposed export curbs at the same time. The shortfall is being plugged by alternative cargoes from the United States, Argentina and Algeria, with government underwriting helping to secure deals at higher spot prices.
This matters for freight rates because the shipments now arriving were priced and routed at the height of the disruption. Asian refineries are configured to process Middle Eastern crude — when that supply tightened, regional refining margins tightened with it, and the cost reaches Australian terminal gates 2–6 weeks after a shipment leaves port.
In practical terms for our customers: budgets and contract pricing assumptions for the remainder of FY26 should not assume a return to pre-February freight levels. Quarterly review of freight-inclusive product pricing is prudent, and we will continue to keep the levy surcharge separated transparently rather than rolling it into base pricing — for the reasons set out at the top of this post.
Sources & Weekly Data Points
The levies are reviewed fortnightly. We’ll update this post if there’s a material change before the next scheduled review.
What’s driving rates this week — referenced sources:
- International gasoil down 1% w/w to 29 April; the underlying trend has stabilised after the previous week’s 18% drop (ACCC, 1 May 2026).
- Terminal gate diesel sitting at ~220–223¢/L across Sydney, Melbourne and Brisbane as at 1 May; AIP retail average ~275¢/L, down 33.9¢ on the previous corresponding period (HVIA Fuel Security Update, 1 May).
- National diesel reserves up to 33 days (from 31), petrol 44 days (down from 46) — National Cabinet has confirmed Australia remains at Level 2 of the National Fuel Security Plan (PM&C fuel supply update).
- Perth wholesale prices have lagged the eastern states this cycle — BP TGP for Perth was ~219.5¢/L on 1 May vs ~221¢/L on 2 May, still trending sideways while eastern states ease (BP Terminal Gate Pricing).
- Around 4.0 billion litres of crude, diesel, jet and petrol scheduled to arrive over the next four weeks; Strategic Reserve has secured an additional 450 million litres of diesel and 100 million litres of jet fuel (PM&C, Apr 28).
- Government messaging: “prices will remain high for a significant period of time” — HVIA interpretation suggests well into 2027 (HVIA, 1 May 2026).
TFB Trading freight costs are per pallet, rounded to the nearest whole dollar. Fuel levy % is applied to the base freight rate and reviewed fortnightly. Bean Growers Australia figures represent the extraordinary fuel levy surcharge on freight-inclusive pricing, plus GST, as published by BGA. Contact TFB Trading for your specific account rates.