Walmart Inc will charge some of its suppliers from next month new fees to transport goods to its warehouses and stores in response to rising fuel and transportation costs, according to a memo seen by Reuters.
The company will impose a “collect pickup charge” calculated as a percentage of the cost of goods received and a fuel surcharge based on the cost of fuel to transport the goods, the memo from Walmart’s chief merchandising officer and chief operating officer for Walmart U.S. said.
The move comes more than a month after Walmart, the nation’s largest retailer, cut its full-year profit outlook blaming rising costs of labor and fuel. Fuel costs, in particular, ran over $160 million higher than it had anticipated.
The Wall Street Journal first reported on the details of the memo, which was addressed to Walmart’s “Valued Collect Suppliers”
“This program is a result of Walmart adapting to the significant transformation and increased costs seen in the transportation industry over the past few years,” the memo sent on Friday read.
“The changes outlined… allow us to share cost accountability with our Collect suppliers, helping to enable us to meet our everyday low price commitment to our customers,” it said.
In June, Walmart’s U.S. CEO John Furner said the company would need to pass on the costs of higher fuel or shipping to “to fairly price and protect the margins where appropriate.”
He also added at the time that some suppliers were responding positively to the retailer’s efforts.
“The Collect program positions Walmart and participating suppliers to adapt to the dynamics of the current economic environment,” a Walmart spokesperson said while confirming the memo’s details. (Reporting by Siddharth Cavale in New York and Ananya Mariam Rajesh in Bengaluru; Editing by Shailesh Kuber)