Loblaw hikes supply chain charges for its suppliers as transportation costs rise

BRAMPTON, Ont. (CP) – Loblaw Companies Ltd. is raising the supply chain handling fees it charges suppliers of its grocery and drugstores.

In a letter to suppliers dated Oct. 3, the company says it experienced significant year-over-year increases in many of its supply chain costs, including higher “cartage” or freight costs.

Loblaw says its fees will go up Jan. 1, 2023, with distribution centre delivery charges increasing to 1.17 per cent and direct-to-store delivery charges rising to 0.36 per cent.

Sylvain Charlebois, Dalhousie University professor of food distribution and policy, says the notice is an example of a unilateral decision made by grocers to increase fees and get suppliers to financially support their operations.

He says sometimes the higher fees and charges are warranted, and sometime they aren’t, and says this points to why the grocery industry needs a code of conduct.

In a progress report in July, an industry committee set up to establish a grocery code of conduct said it made significant progress but may require government intervention if it fails to resolve the outstanding matters by November.

Loblaw vice-president of communication Catherine Thomas says at this time of year, the company advises its suppliers of fees to move goods through its network for the following year.

“This includes situations where we pick up, ship and deliver their goods for them,” she said in an emailed statement.

“Our costs for handling this business have gone up and consequently we are notifying suppliers of some adjustments to the fees, if they choose to use these services.”

Earlier this week, Loblaw announced it would freeze prices on all its in-house No Name products until Jan. 31, 2023, in an effort to help customers grappling with inflation.

Critics warned the company could look to recoup profit losses elsewhere.