What are Carriage Service Charges?

For more than 75 years wholesalers have charged their retailers a carriage service charge. This is because the cost of delivery to the retailer is not accounted for in trade discounts. However wholesalers only recover a proportion of distribution costs (circa 66% in 2001) through CSCs.

Why should retailers pay for their newspapers to be delivered when they don’t pay for their other products?

In the case of non-news products delivery is included in the price. Fixed cover prices on newspapers and magazines together with publisher recommended margins do not support that business model. A separate charge for delivery provides more transparency.

According to trade reports recently there have been very high percentage increases in CSCs. These are hitting small, independent newsagents very hard.

These reports are misleading. It is true that in 2002 wholesalers have introduced new CSC templates to provide a transparent approach to CSC rates and to ensure a consistent application of charges across all retailers. Previously, from 1994, new entrants to news retailing paid CSCs, which more closely represented commercial and economic distribution costs. These retailers have therefore been paying more than established retailers. The OFT advised that to avoid discrimination new and existing retailers should be brought into line. This is what wholesalers have aimed to do. Whilst some retailers have seen an increase in their CSCs, approximately one third of news retailers have experienced a reduction in charges. Not surprisingly it is the retailers who have seen a rise who have been most vociferous. However:

• · These retailers have enjoyed very low charges for some years
• · An average independent retailer with an average weekly invoice value is still only paying £4-4.50 per day for delivery.

Surely small and rural retailers are disadvantaged by the application of Carriage Service Charges?

Far from it. Wholesaler CSC templates do not reflect individual delivery costs and therefore protect the small and rural retailers from the full cost to serve. Wholesalers believe this is a responsible approach to ensure the widest possible availability of news products across a diverse retail estate.

What factors have influenced delivery costs?

Distribution costs have risen significantly since the Monopolies and Mergers Enquiry in 1993. This is due to a growth in the number of news retailers (up from 44,474 in 1992 to 53,879 in 2008) leading to more delivery points together with a dramatic increase in the weight and complexity of product caused by national newspaper publishers introducing more pages together with extra supplements and advertising inserts.

How transparent are Carriage Service Charges?

To bring additional transparency to Carriage Service Charges, wholesalers have proposed a top-level audit of distribution costs. A detailed document has been prepared with assistance by the Freight Transport Association, and submitted to the Joint Industry Group for consideration.