Before an ingredient reaches the storeroom, it has already travelled through a chain that is becoming considerably more expensive. Woolworths has increased the fuel levy charged through Primary Connect, its logistics network for transporting products from suppliers to distribution centres and stores. Primary Connect manages freight for more than 1,000 grocery producers, including major food brands such as Arnott’s, Ingham’s, Sanitarium and PepsiCo. According to ABC News, the metropolitan fuel levy recently increased from 17.47 per cent to 19.88 per cent. For regional transport, it rose from 44.20% to 50.30%, which is more than 172% higher than the 18.44% levy recorded in March. Woolworths says the adjustment reflects higher diesel costs and is intended to help the independently operated transport businesses within its distribution network keep their trucks moving. Fuel levies are a standard method of responding to changing transport costs. Rather than renegotiating an entire freight contract whenever diesel prices move, operators can adjust the surcharge periodically. So where does that additional expense eventually land? University of Sydney supply chain specialist Professor Ben Fahimnia told ABC News that suppliers had already absorbed some costs and looked for savings elsewhere, but there was a limit to what they could carry. “Someone ultimately has to pay, and, at these fuel levy rates, that will be Australian consumers at the check-out,” he said. This is not a direct levy on restaurants, cafés or clubs, and it should not be treated as evidence that every hospitality supplier will immediately raise its prices. Transport is only one component of a product’s final cost, and any effect will vary between suppliers and categories. It is, however, an important signal for hospitality purchasing teams. Freight pressure can emerge through higher delivered prices, changed minimum order quantities, reduced delivery frequency or smaller discounts. The effects may be particularly noticeable in regional communities, where longer distances already make distribution more expensive. Operators should watch supplier communications, compare delivered prices with advertised prices and examine whether several small increases are quietly changing the true cost of a menu item.
