Subcontractors have slammed Fowler Welch's plans to review rates in the midst of the COVID-19 crisis.
The company, which specialises in the delivery of ambient and temperature controlled products to major supermarkets, has told its subcontractors it is reviewing rates in response to falling fuel prices.
In a letter sent to its subcontractors last week the company states: “We are currently looking at carrying out a rate review to reflect the drop in the price of fuel.
“The saving year on year has been approximately £0.09, with the last six weeks showing a reduction of £0.13 ppl.”
It adds: “In turn we would like to find a way to share this benefit. We will be in contact next week with our proposed rate and this will commence in line with the beginning of our new financial year.”
One subcontractor told motortransport.co.uk the move was ill-timed in the midst of the COVID-19 pandemic.
“I was very surprised to receive this letter from one of the largest players in the supermarket distribution.
“Margins for subcontractors have been wafer thin, any fuel cost reduction will help us in our battle for survival and I think it is appalling that Fowler Welch is trying to claw this benefit back.”
Subcontractors also raised concerns that logistic industry rates could be driven down during the pandemic because so many logistics companies have seen their workloads plummet since the start of the outbreak.
One subcontractor told motortransport.co.uk: “To do this now is appalling. There are a lot of trucks parked up right now because of the pandemic just waiting for work and some of those firms will be desperate enough to accept reduced rates just to keep going.”
Fowler Welch chief executive Nick Hay defended the company’s strategy.
He told motortransport.co.uk: “Any company will review pricing when input costs go up or down. There has been a 13% drop in fuel prices - one of the largest input costs - so why wouldn’t we review this?
He added: “We are constantly reviewing the input costs of our subcontractors and our customers - and as the letter says we are looking how we can share the benefits of the drop in fuel prices.”
Hays insisted the review had not been prompted by the impact of the COVID-19 pandemic on the industry.
“We are not doing this to profiteer. This is in response to the 13% drop in fuel prices – we all work on tight margins in this industry and everyone has to look after their business.”
Asked if the company would consider delaying the rates review until after the pandemic, Hay said: “COVID-19 could last for 12 months – it does not make sense to wait 12 months. This is not about COVID-19.”
He added: “As the letter says, this is a review and if subcontractors want to contact me to discuss the review I would be happy to do so.”
