Previously we reviewed and adjusted our fuel surcharge on a weekly basis. The current climate has seen very volatile fuel prices, and to protect our customers from constant fluctuations in their transport costs, we have decided to inject some stability into our fuel surcharge procedure. From 1st October 2008 we have been adjusting our fuel surcharge every month based on the average of the previous month's costs.

The majority of rate schedules are set on a base cost of 78 pence per litre. However major account customers have individually negotiated surcharges which may differ from the illustration below.

The following table illustrates the effect of fuel price increases on our operating costs. Fuel costs reached nearly 110 pence per litre in July 2009, before dropping for a while, but our bulk purchase price has increased significantly in recent weeks.

We have traditionally worked on the basis that every 1 pence per litre difference in fuel impacts on overall costs by .5%. However if fuel costs escalate to over 100 pence per litre there is a slight proportionate reduction in how the increases affect operating costs. Therefore where fuel costs are above a bulk buying cost of 100 pence per litre, our corresponding fuel surcharge is adjusted to .25% as shown below.