TWU members have protested outside Aldi stores across the country © Jakub Porzycki/NurPhoto via Getty Images
TWU members have protested outside Aldi stores across the country © Jakub Porzycki/NurPhoto via Getty Images

Aldi accused of supply chain practices that led to company collapse

13 March 2023

Australia’s Transport Workers' Union (TWU) has become embroiled in a war of words with Aldi – accusing the retailer of supply chain practices that led to the demise of Scott’s Refrigerated Logistics.

TWU members protested outside Aldi stores around the country after the union blamed the chain for the collapse of the Scott’s, Australia’s largest cold chain logistics company.

The union said a Scott’s creditors’ meeting heard that unsustainable contracts from wealthy clients were a leading cause of the company’s collapse.

And it said it was calling on supply chain clients to urgently sign a charter with the TWU committing to lift standards of fairness and safety throughout their supply chains.

Aldi was the only one of the major supermarkets not to have signed the charter after Woolworths and Coles signed the document, the TWU claimed.

But Aldi responded that it “utterly refutes all allegations” made by the TWU.

“This ongoing, targeted campaign to discredit Aldi by the TWU is both baseless and damaging,” the company said.

“The TWU continues to make unsubstantiated and wildly inaccurate claims about both our supplier partnerships and how seriously we take the safety of our drivers.”

The TWU said at the creditors meeting administrators listed “uncommercial customer arrangements as a result of intense market competition” as a key reason for the company being placed into administration.

Other factors included impacts from the pandemic and natural disasters, and the considerable costs of maintaining an ageing fleet.

Michael Kaine, TWU secretary, said: “What we now know as an absolute certainty is that 1,500 workers have lost their jobs because of cannibalistic competition driven by wealthy companies, who rake in profits while pushing operators like Scott’s to the brink.

“Drivers and operators are being left to fend for themselves amidst natural disasters, the pandemic and skyrocketing operating and maintenance costs because wealthy clients like Aldi refuse to take responsibility for fair, safe and sustainable supply chains.”

It said while the federal government planned to introduce legislation to increase fairness in the transport industry it was calling on “Aldi, Amazon and other behemoths [to] immediately commit to lifting standards in transport”.

Aldi denied its business model involved squeezing suppliers.

“Our low prices are possible thanks to our focus on efficient business process,” the company said.

“Aldi sets clear expectations with our suppliers to ensure there is correct payment of wages, vehicles are maintained, delivery timeframes are realistic and achievable, and drivers take breaks as required by legislation.”

Aldi added that it accounted for just 3% of Scott’s business and it was wrong and unfair to blame it for the collapse of the company.

It also denied it refused to engage with the TWU, saying it had offered to meet officials two weeks ago and was still awaiting a reply.

Suppliers are reportedly trying to retrieve $500m worth of frozen food from refrigerated warehouses belonging to Scott’s, according to ABC News.

According to the Refrigerated Warehouse and Transport Association other companies have insufficient capacity to take the food.

Administrator Korda Mentha said it was working against the clock to relocate more than 110,000 pallets of frozen goods from Scott's refrigerated warehouses.

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