Woolworths freight fuel levy surcharge almost triples since Iran war
Experts say consumers and suppliers will "ultimately pay" for Woolworths' increase in its freight fuel levy surcharge.
Woolworths has nearly tripled its fuel levy for food and grocery suppliers since the Iran war, as diesel costs soar. This fuel levy surcharge affects major food and grocery manufacturers, including those in metro and regional areas. The company's logistics arm, Primary Connect, transports goods from suppliers to distribution centres and stores across Australia.
The fuel levy for metro areas increased from 17.47% to 19.88%, while in regional Australia, it rose from 44.20% to 50.30%. University of Sydney supply chain management professor Rico Merkert explained that such increases are common when diesel prices rise sharply, and freight providers and retailers often adjust surcharges to cover additional operating costs.
The fuel levy for Woolworths in metro areas was 7.28% before the Iran war, rising to 12.47% shortly after. In regional areas, it jumped by more than 172% since March. Woolworths stated they are committed to supporting their transport partners and reviewed the fuel levy twice monthly in March to address the challenges they still face.
Experts predict consumers and suppliers will bear the brunt of the increased freight costs. University of Melbourne's Medo Pournader and University of Sydney's Ben Fahimnia agree that passing rising logistics costs onto suppliers is not a sustainable solution, as businesses have absorbed some costs and can't absorb more. Ultimately, consumers at the checkout will likely pay the price, with rising fuel levies contributing to higher retail prices and inflation.
Reserve Bank governor Michele Bullock warned businesses might pass on higher fuel costs if necessary, with the war's duration affecting the likelihood of cost passing.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
