Tesco hits suppliers with eye-watering distribution charge again

Tesco has hit suppliers using its primary distribution service with another distribution charge hike, the second in the space of one year.

According to The Grocer, the Big 4 grocer wrote to suppliers explaining from 29 May rates will go up by nearly 8%, blaming the continuing HGV driver shortages and rising inflation, alongside, new legislation governing increased tax on red diesel.

However, this is not the first time the grocer increased its prices for suppliers, in July last year, a 14% surcharge billed to suppliers.

“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.

READ MORE: Tesco CEO Ken Murphy pockets £4.74m pay packet

 “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.”

A Tesco spokeswoman told The Grocer: “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.”

Grocery Gazette has contacted Tesco for further comment.

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