Tyson: Added freight costs won’t hurt product demand

Facing increasing transportation costs, Tyson Foods is passing some of that additional cost on to the consumers. But the company’s CEO says he does not believe that will have a meaningful impact on the demand for Tyson Foods products.

Roy Graber Headshot
Photo courtesy of Tyson Foods
Photo courtesy of Tyson Foods

Facing increasing transportation costs, Tyson Foods is passing some of that additional cost on to the consumers. But the company’s CEO says he does not believe that will have a meaningful impact on the demand for Tyson Foods products.

In a May 7 conference call with reporters, Tyson Foods CEO Tom Hayes was asked if he anticipated any softening of demand as a result of those increased costs.

“[The consumers] are not going to find themselves with monstrous increases. For us, we don’t believe there is going to be a tremendous demand disruption in any of our products, based on any of our brands, but also the categories we play in are hot categories. They continue to grow and we feel like the consumer will pay the freight costs, and it should be relatively low to them,” said Hayes, adding that any increases will likely be “even hardly noticeable.”

The conference call was held on the same day the company reported the financial results of the second quarter of fiscal year 2017.

However, Hayes, shortly after the first quarter results were released in February, told CNBC that it was struggling with a driver shortage and related increased costs. He stated at the time, passing along extra costs to the consumer was “something we have to do because it’s a cost.”

Driver situation improving

Hayes added he felt the situation with a trucker shortage was improving.

“We don’t see it getting any worse as it relates to the drivers,” said Hayes. “In fact, I’d say we’re making some really strong improvements. It’s part of our efforts to continue to attract and retain the drivers that are in our system.”

Hayes noted that the company has increased its pay for refrigerated truck drivers by as much as 15 percent, and has increased the starting pay for experienced drivers.

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