Drive DeVilbiss temporarily introduces freight surcharge and suspends the use of its RRPs
Following a review of the current extraordinary freight costs and introducing a temporary freight surcharge last month, Drive DeVilbiss has stated that it is suspending the use of its Recommended Retail Prices (RRPs) on its products until the global shipping crisis stabilises.
In a statement, the firm commented that while its RRPs are used frequently across the market, they are intended to be used as a guide set by itself as a manufacturer and distributor.
It said: “We want to ensure transparency and fairness with all our customers and hope this allows for more independence whilst we are all impacted by ever-changing external factors.”
The firm has stated that it is looking to re-instate RRPs as soon as possible.
The decision about RRPs comes after Drive DeVilbiss UK implemented a temporary surcharge across its product ranges in January 2020 due to “unprecedented and fast-moving changes in cargo demand.”
UK manufactured items, it said, will also be impacted due to its parts supply chain; however, the surcharge will be limited to two per cent in most cases for these items.
Drive DeVilbiss intends to adjust the surcharge costs as the situation changes and discontinue the surcharge once this supply issue is resolved, with customers updated monthly on the situation.
In a letter to customers, Richard McGleenan, Group Managing Director (UK) at Drive DeVilbiss explained that cargo volumes are at least 60 per cent above normal volumes, which is causing severe congestion at outgoing ports.
As a result, he said, the purchase cost rates for container transport are skyrocketing and carriers have cancelled supply contracts with their customers, including Drive DeVilbiss Healthcare, which is forcing the purchase of container space on the open market.
“The open market rates are being charged at four to six times the regular contracted rates we normally paid for goods transport, and there are various additional surcharges and fees on top. Industry experts have recognised that the situation has caused staggering increases in costs for shippers.”
While Drive DeVilbiss Healthcare has absorbed 100 per cent of the impact of these disruptions for several months now, the letter stated that the disruption has got to a point where this is no longer viable and that the firm has “no choice” but to pass some of these additional logistics costs on.
