Fuel Price Road Transport Contract Chain Order To Return (In Modified Form)

On 16 October 2026, an Expert Panel of the Fair Work Commission announced its intention to re-enliven the Road Transport Contractual Chain Order – Fuel Cost Recovery – 2026 (the Order) requiring parties in the contract supply chain to ensure recovery of the increased cost in fuel, subject to a number of important amendments.

Some of the amendments are welcome (and were sought by ABLA on behalf of our clients) as they should reduce some of the burden with complying with the Order. However, some other proposed amendments were not accepted and the Order will continue to significantly intervene in contract supply chains for the time being.

We briefly summarise the Order’s operation below, before identifying the proposed key amendments.

Who needs to be concerned about this?

• If you deliver your own goods by road – such as a concrete company
• If you engage a transport company to deliver goods by road – such as large wholesaler or retailer
• If you receive goods transported by road – you could be a factory, retail shop or restaurant
• If you are a transport company
• If you engage owner drivers (or gig workers)
• If you transport passengers – such as a bus company (you should talk with us separately about this)

What is the Order?

As a general summary, the Order imposes an obligation to pay rates for goods supplied by road that covers changes in fuel costs (i.e. the increased cost of fuel) since 6 March 2026 (the commencement of the Iran war).

This impacts all persons in the supply chain: 

• it works down through a supply chain to ensure the higher fuel costs are covered in amounts paid to contractors, subcontractors and owner drivers and gig workers; and 
• it works up and through the supply chain to the party at the apex of the supply chain (i.e. the person with the first contract or arrangement in the contractual chain). This means the ultimate ‘customer’ in the supply chain also needs to ensure rates paid for any transport services cover the increased costs associated with fuel.

Both “rate” and “increased cost of fuel” are defined terms in the Order:

• “Rate” means the contracted, standard, ongoing or usual rate or amount paid by one person covered by this Order to another for the performance of work in the road transport industry on or before 6 March 2026, including an hourly rate, a running rate, a total amount, or any other form of payment or combination of the foregoing.
• “Increased cost of fuel” means the difference between the cost per litre for the type of fuel used to perform the relevant work in the road transport industry at any given time and the cost as it was on or before 6 March 2026.

What are the key changes to the Order since its previous iteration?

The key amendments are as follows:

1. fuel cost adjustments currently required under the Order would move from a fortnightly (or twice monthly) cycle to a monthly adjustment cycle. This was proposed by ABLA and is a welcome change to ensure the administrative burden with compliance is effectively halved;
2. the obligations in the Order cease where the national diesel terminal gate price remains below $2.00 per litre for four consecutive weeks;
3. the rate adjustment obligations may be satisfied through adjustments made in accordance with and ‘at the time and intervals’ determined by a relevant State or Territory industrial instrument. Primarily, the effect of this change is that if parties are making fuel cost adjustment in accordance with the Transport Industry - General Carriers Contract Determination, variations made in accordance with the Determination will comply with the Order; and
4. the insertion of a new clause 4.6(d) to clarify that the payment obligations in the Order can be satisfied by payment of a fuel levy that is agreed between persons in the road transport contractual chain provided:

• the person incurring the increased fuel cost has been given a copy of this Order by the other person;
• the fuel levy is adjusted at least each calendar month; and
• the person paying the fuel levy has taken reasonable steps to ensure that the levy is sufficient to ensure that the other person recovers the increased cost of fuel

So, how can the fuel adjustment obligations be satisfied?

The fuel adjustment obligations can now be satisfied by any of the following 4 ways:

1. adjustment of the rate in accordance with an applicable State or Territory industrial instrument which involves the application of a ‘rise and fall’ formula or cost model to account for or address recovery of the increased cost of fuel;
2. adjustment of the rate in accordance with the application of a ‘rise and fall’ formula, cost model or cost benchmark in an applicable collective agreement or contract to account for or address recovery of the increased cost of fuel, so long as the adjustment is implemented each calendar month;
3. an ongoing or special arrangement between persons in a road transport contractual chain which adjusts the rate in accordance with an agreed ‘rise and fall’ formula, cost model or other benchmarking methodology to account for or address recovery of the increased cost of fuel, so long as the adjustment is implemented each calendar month; or
4. payment of a fuel levy that is agreed between persons in the road transport contractual chain provided:

• the person incurring the increased fuel cost has been given a copy of this Order by the other person;
• the fuel levy is adjusted at least each calendar month; and
• the person paying the fuel levy has taken reasonable steps to ensure that the levy is sufficient to ensure that the other person recovers the increased cost of fuel

Can I recover the fuel cost increases up the supply chain from my customer/client?

Yes.

If you are a transport company contracted to another transport company up the chain, they must also meet the fuel increase obligations for you.

If you are a transport company contracted to the party at the apex of the supply chain – which could be a retailer, a manufacturing company, a building company or even a government agency – the party at the apex must also meet the fuel increase obligations for you.

Are there any other obligations?

Yes.

Primary parties in a road transport supply chain (the apex party and the party they contract to) must take reasonable steps to ensure that transport companies (in the same supply chain), who engage owner drivers in the same supply chain, adjust the rate they pay to such owner drivers to ensure recovery of the increased cost of fuel.

This additional obligation does not apply if the primary party:

• is a small business employer; and
• is not a road transport business.

When will this Order commence?

The Expert Panel has invited parties to make further submissions by Friday 23 October 2026.

It is likely that the Order will be finalised and come into effect shortly after this date - ie. late October 2026.

Have questions?

If you have any questions, please get in touch with us at info@ablawyers.com.au.