Packaging

Sonoco Announces a Surcharge on Tube and Core Shipments

Wednesday 09. March 2011 - Sonoco (NYSE: SON), the world's largest producer of tubes and cores, today announced it will implement a surcharge on shipments of its paper-based tubes and cores beginning April 4, 2011. The fee is a direct result of escalating diesel costs, which have increased more than 40 percent over the past 12 months.

Sonoco will apply the surcharge as a flat rate to all customers except those who have diesel-related provisions in their contracts. This fee, which will be based upon the shipping distance from Sonoco’s manufacturing plant to the customer destination, will be evaluated quarterly and adjusted when a significant swing in diesel pricing occurs. The initial surcharge fee schedule is:
Less than 50 miles
$ 50 per shipment
50 to 149 miles
$150 per shipment
150 to 249 miles
$250 per shipment
250 miles or more
$300 per shipment
“While we have taken action to reduce our expenses, the high cost of diesel has simply forced our hand. We are now at a point where we have no choice but to implement this surcharge,” said James Harrell, division vice president of Sonoco’s Industrial Carriers Division. “Sonoco is committed to eliminating this surcharge once the market stabilizes and diesel prices return to our baseline price.”
Sonoco established a baseline diesel price of $3.38 per gallon in July 2008 when market prices for the fuel significantly increased. A surcharge applied at the time was eliminated in early 2009 when diesel prices fell below the baseline for three consecutive months.