Every service provider and supplier to ArcelorMittal is to deliver a 10 percent cost reduction by the end of March, reports German transport portal dvz.de, which has obtained a letter sent by the steel giant to its business partners.
The company claims that only by reducing costs will it be able to ensure the continued operation of its plants in Europe.
If service providers, including transport companies, do not present a new, cheaper offer by the end of March, ArcelorMittal “will have no other choice but to introduce a direct price reduction” – according to a letter to carriers seen by the German portal.
The company claims that this is the only way it will be able to compensate for the consequences of reduced demand caused by the crisis in the automotive industry, manufacturing sector, and construction.
As the group has not achieved its financial targets despite the actions it has taken and strict cost discipline, it can no longer cope without the support of its partners to “survive this period of economic uncertainty.”
Carriers on the consequences
“For some time now, we have been observing that price competition is taking place to the detriment of transport companies,” Dirk Engelhardt, spokesman for the BGL board, told dvz.de. Engelhardt believes that such demands from shippers will lead to a permanent reduction in transport capacity and fleet sizes. He therefore calls on corporations to adopt a partnership approach.
This is not the first such appeal from the manufacturer.
ArcelorMittal made a similar appeal over a year ago. Before the German toll increase, the company sent a letter to its transport service providers in Germany outlining how it saw the terms of cooperation after 1 December, i.e. after the increase in road tolls.
The manufacturer did offer to take on the toll increase under terms it specified (the basis for calculating the additional amount would be the number of kilometres travelled on German motorways from loading points to the headquarters of ArcelorMittal’s customers). In return, however, it expected carriers to lower freight rates.
“We must ask for a reduction of current basic prices by minus 5 percent from 1 January 2024, which will be valid until the end of 2024,” the metallurgical concern appealed to transport companies at the time.
