Loblaw raising fees for suppliers in 2023 to offset higher supply chain costs

Grocery giant Loblaw says it experienced significant year-over-year increases in many of its supply chain costs and will pass those hikes along in higher fees to suppliers.

Loblaw Companies Ltd. is increasing how much it costs suppliers to get products on its grocery and drugstore shelves.

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

Loblaw said its supply chain handling fees will go up Jan. 1, 2023, with increases to both distribution centre delivery charges and direct-to-store delivery charges.

“These fee changes reflect those supply chain cost increases,” Blaine Caldwell, Loblaw senior vice-president of logistics and replenishment, said in the notice to suppliers.

Industry observers say fee increases will likely be passed on to consumers, contributing to higher food prices.

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

Sometimes the higher fees and charges are warranted and reflect the rising cost of doing business, while sometime they are less clear cut, he said.

“It points to why we need a code of conduct,” Charlebois said.