As the ongoing uncertainty in the Middle East continues to drive up fuel prices, several food suppliers in Canada are imposing fuel surcharges on deliveries to offset their increased costs. Documents obtained by CBC News reveal that Sunrise Farms, CTS Foods, Maple Leaf, and Tree of Life are among the suppliers implementing these surcharges. The additional fees, ranging from five to eleven cents per kilogram or a fixed amount, are being introduced as a response to the surge in oil prices following the disruption of the Strait of Hormuz, a critical waterway for global oil transportation.
Sunrise Farms informed buyers of a five-cent-per-kilogram fuel cost adjustment and a $10 fuel surcharge effective April 13, with adjustments planned bi-weekly based on market conditions. Maple Leaf announced an 11-cent-per-kilogram surcharge for meat and poultry shipments starting April 6, to be reviewed weekly. CTS Foods and Tree of Life also confirmed temporary fuel surcharges of $10 per delivery.
Some smaller grocery store owners are now contemplating passing on the increased costs to customers due to these surcharges. Munther Zeid, the owner of Food Fare in Winnipeg, mentioned that surcharges could add up to $100 per pallet of goods, prompting him to adjust prices accordingly. However, the decision to raise prices varies depending on the product, with some perishable items experiencing slight price increments.
While some suppliers have refrained from imposing surcharges, others are considering it to cover transportation expenses. Giancarlo Trimarchi, president of Vince’s Market in Ontario, has chosen not to increase prices immediately, acknowledging customer sensitivity to price hikes. Larger grocers like Sobeys and Safeway are reported to be declining fuel-related surcharge requests from suppliers, while others are reviewing and negotiating such requests.
Fraser Johnson, a professor at Western University’s Ivey Business School, highlighted that transportation costs can make up a significant portion of grocery expenses. He emphasized the importance of grocers negotiating surcharges with suppliers once fuel prices stabilize. Despite the federal government’s temporary fuel tax suspension, experts believe it may not alleviate the impact of rising fuel costs significantly.
Trimarchi advised shoppers to opt for locally grown produce as the Canadian growing season commences, as these items are less affected by fuel-related costs compared to imported goods. As the industry navigates these challenges, the negotiation power lies predominantly with larger grocers, who can influence supplier agreements to mitigate the impact of fuel surcharges on consumer prices.