Dear Valued Customers,
Fuel cost increases are an unfortunate reality for anyone that buys a tank of gas these days. To put some numbers on this situation, there has been a 40% increase in retail fuel prices in the US and a 60% increase in world crude oil prices since November of 2005.
As a manufacturer receiving goods and shipping finished products, increased fuel charges affect us in at least two ways:
1. Our inbound cost of goods increases as our vendors increase their prices to us to cover their higher shipping costs.
2. Our shipping carriers increase their charges to us via annual rate increases and monthly fuel surcharges. The average fuel surcharges from our shipping carrier (and all other carriers for that matter) generally add an extra 16% to 20% on top of our shipping bill each month. Likewise, all freight carriers (including ours) increase their base rates by approximately 5% each year.
We have worked hard to improve our manufacturing efficiency in order to keep our production costs to our customers at the same level in the face of rising costs from our suppliers. As such, we are not increasing our production prices even though our cost of goods has risen due to fuel charge increases.
However, we are unable to continue carrying the entire burden of the increased costs to ship our product to you. Though we have been able to go for two years without a freight or production cost increase (since November of 2005), we regret having to pass along some of these increases as outlined in the following schedule. These shipping cost changes and increases will take effect on Monday, November 19, 2007. Naturally, we will honor any pre-existing quotes presented to a customer prior to this date.
New Freight Changes and Price Increase Schedule
Thank you for your understanding and cooperation in this matter. If you would like to discuss this matter in more detail, please feel free to give me a call on my direct line at (303) 951-1428.
Kindest Regards,
Rod Rackley
Chief Revenue Officer