Soaring container rates and reduced shipping capacity due to pandemic-led supply chain pressures have left Drive DeVilbiss Healthcare with no choice but to implement a temporary surcharge across its product range until the volatility eases.
The company has also suspended the use of Recommended Retail Prices (RRPs) until the freight crisis stabilises.
Drive Devilbiss has absorbed the full financial impact of global supply chain disruptions since last year, but said the situation had reached a point where that was no longer viable.
In order to continue servicing customers and ensure that equipment gets to the people who need it, it has introduced a fee to alleviate the additional logistics costs incurred.
The amount of the surcharge will vary according to the impact of the freight increase on each product.
Items manufactured in the UK will also be impacted due to its parts supply chain, however the surcharge will be limited to 2% in most cases for these products.
The surcharge was introduced at the end of January and will be reviewed monthly, with the company stressing that it is both a “temporary and transparent” measure.
Group managing director, Richard McGleenan, said the industry has seen severe congestion at outgoing ports across the world, with cargo volumes estimated to have been 60% or more above normal volumes during January.
This “extraordinary” situation has sent cost rates for container transport “skyrocketing” and led to carriers cancelling supply contracts – including with Drive DeVilbiss – forcing the purchase of container space on the open market at a time when capacity is significantly reduced.
“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,” he revealed.
“The temporary surcharge is intended only to pass on some of these unabsorbable costs we are being burdened with; as a result, Drive DeVilbiss intends to adjust the surcharge costs as the situation changes and discontinue the surcharge once this supply issue is resolved,” confirmed Mr McGleenan.
In line with the temporary freight surcharge, Drive DeVilbiss said a separate measure to suspend Recommended Retail Prices would also be reinstated as soon as possible.
RRPs are used frequently in the market as a guide set by manufacturers and distributors for the retailer channel.
The company said it wants to ensure transparency and fairness with all its customers and hopes that withholding RRPs will allow for more independence while ever-changing external factors continue to impact normal operations.