Retailers Issue Christmas Warning When ‘Perfect Storm’ Causes Delays
Travis Erridge, chief executive of supply chain consultancy TMX Global, said these problems are further compounded for Australian retailers, who are forced to pay a premium to even have ships dock in local ports.
“Shipping companies make decisions based on volume, not who needs it, so unfortunately we have to pay a premium to attract ships,” he said.
Securing 20 feet of shipping container space now costs $ 4,000, 400 percent more than this time last year. These costs continually increase 4 to 14 percent per week, Erridge says.
All major retailers that reported their full-year results last week pointed to shipping costs as a point of concern, and discount seller The Reject Shop said logistics had cost the business an additional $ 9 million over the year. fiscal 2021, a figure the company expected to increase in fiscal 2022.
This is likely to cause consumer goods prices to spike as companies raise costs to preserve margins. Appliance maker Breville said it would do exactly that, and CFO Martin Nicholas told investors that shipping prices currently “have no limits.”
Paul Zahra, executive director of the Australian Retailers Association, said he was “deeply concerned” by the continued impact of COVID on supply chains. Home and entertainment items are more likely to be affected, he believes, along with electronics, as markets are also currently experiencing a semiconductor shortage.
The closures currently in place in New South Wales and Victoria will help ease some of the inventory crisis, Heraghty said, as consumer spending has fallen due to stay-at-home measures. However, the overall outlook for the industry was not positive.
“It is very unusual to have a volatile demand curve and a volatile supply curve. We really are in uncharted territory here, and with no real resolution on the horizon for either of us. “
But not all retailers will have stock issues, he said, and many, including Super Retail, which spent $ 200 million propping up its inventory position, braced for this situation.
“Retailers that are well planned with their inventory and have positioned themselves to make sure they get their hands on the stock, I think they will be in a good position,” he said.