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To Our Valued Customers
As we continue to navigate through these unsettling times, inflationary cost increases and supply chain disruptions continue to be the primary challenges for the food service industry. We are all experiencing, in our professional business and in our personal lives, the broad effects these economic trends are having on costs. Inflation has taken center stage and further challenges all industries with instability, and with the additional concerns of a potential recession. These inflationary rates, which have not been seen in Canada for decades, are the next hurdle imposing new challenges. As an example, please see the chart below which outlines the increase in fuel surcharges that Russell Hendrix has incurred over the past twenty-four months.
In addition to the increases in freight and fuel surcharges, Russell Hendrix has also experienced material increases in other operating expenses due the current inflationary environment. With the ongoing Supply Chain disruptions, product transfers have increased by over 50% as we continually strive to meet our customers requested ship dates. These transfers have experienced the same increase in freight and surcharges as referenced above. In addition, labour rates in our distribution centres have increased by more than 15%.
For months, Russell Hendrix has been absorbing these, and other cost increases, as we tried to minimize the impact to our customers and continue to deliver the same quality service you have come to expect from us. Unfortunately, ongoing escalation of outbound freight costs, the dramatic and accelerating increase in fuel and other surcharges, the increases in transfers to service our customers, plus increases in labour and other operating costs now requires action in order to maintain our level of service.
Effective immediately, Russell Hendrix will impose a surcharge on all new orders. In addition, all current customer orders not shipped by August 15, 2022, will also incur this surcharge.
Supply chain disruptions have also impacted Russell Hendrix’s ability to provide the products that you need, in the time you need them. Over the past year, we have seen lead times extend to unprecedented levels. As lead times vary dramatically across different product categories, Russell Hendrix has held significant amounts of inventory across our distribution network as we await the arrival of longer lead time items. We recognize that this is impacting our ability to get product to you per your requested ship date. To improve our ability to get product to you in a timelier manner, effective immediately on orders that are requested to ship complete and there are items that are backordered as of the requested ship date, we will now ship product when we have 80% of the order in stock. The remaining back ordered product will be shipped complete once we are able to fill the balance of your order.
On behalf of Russell Hendrix, we sincerely appreciate your continued support and understanding during these challenging times. Your Russell Hendrix sales and customer service representatives will be available to answer any questions or concerns. We continue to do everything possible to reduce these inflationary cost pressures and to alleviate the ongoing supply chain disruption. We are committed to providing you, our valued customers with the quality service and products that you have come to expect from Russell Hendrix.
Yours truly,
Tom Pitera
CEO and Executive Chairman
Russell Food Equipment