Suppliers using Tesco’s primary distribution service are to be hit with a second eye-watering cost hike in the space of a year, The Grocer has learned.
The supermarket has written to suppliers saying rates will go up by almost 8% from 29 May.
It blamed the continuing shortage of HGV drivers, soaring energy costs and new legislation governing increased tax on red diesel.
The move comes on top of a 14% surcharge billed to suppliers using the service last July, at the height of the driver shortage crisis.
“As you are aware, over the last year the logistics industry has been hit with rising costs due to several factors outside of our control, including the well-documented shortage of drivers, increasing energy costs and now increased costs due to legislative changes on the use of fuel in fridges used by our hauliers,” said a letter to suppliers.
“The change effective 1 April basically means that the tax for red diesel will be at the same rate as diesel.”
It added: “As always, we do want to ensure we have the most cost-effective solution in place and therefore we will be looking to review and tender volume over the coming months. We will obviously discuss any options with yourselves.”
Ged Futter, founder of The Retail Mind, said the increase was another blow for suppliers already facing huge inflationary pressures and ingredient shortages, and questioned the short notice Tesco had given.
“I would ask, do Tesco ever agree cost price increases in five weeks? Not a chance,” he said.
“Tesco CEO Ken Murphy has said that when they are taking inflation they would be least and last. It would seem that when they are passing inflationary costs on to suppliers, then, they are first and highest.”
A Tesco spokeswoman said: “At Tesco, we’re doing all we can to manage the higher industry costs so that we can continue to offer the best and most competitive service to our Tesco Primary customers.
”In the face of the cost pressures across the logistics industry, rate increases were necessary. We recently contacted affected suppliers about an increase for our Tesco Primary distribution service but will keep these rates under constant review.”
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