Tesco raises supplier distribution fees for third time since 2021

Tesco has hiked its suppliers distribution fees for the third time in three years as it can no longer afford to financially support businesses with its primary distribution service.

Suppliers now have four weeks before the new changes will take effect, The Grocer reported.

The supermarket giant first hiked fees in July 2021 with a 14% surcharge, followed by an 8% rise last year and as a result of the latest change, fees will have risen by almost 30% since the pandemic.

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A letter from Tesco primary commercial manager, Michelle Day, seen by The Grocer told suppliers that the retailer had seen increased costs due to a “shortage of drivers and the pressure on wages, inflation levels, increased energy, fleet and insurance costs”.

She explains in the letter that “these factors are outside of our control but as Tesco Primary we do our best to limit the impact of these cost pressures”.

“Tesco have been subsidising several increased costs for several months. However, having reviewed rates and any mitigations, unfortunately we need to advise you of a change to your rates.”

This comes following Tesco’s efforts to introduce Amazon-style ‘fulfilment fees’, requesting suppliers to pay additional charges to help cover rising online costs.

However, the move, which was first announced in March, was not taken well by suppliers and farmers, who warned that new fees could risk the survival of their businesses.



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