New threat for businesses will cost consumers
We have heard about it on a global scale. The reopening of economies around the world has brought with it a storm of supply shortages and logistical problems.
Just this week we saw it in Canadian trade numbers, as the global shortage of semiconductor chips sent imports and exports of autos and parts spiralling.
We’ve also seen it in the skyrocketing price of lumber, and metals like tin and iron, which have spiked more than 50 per cent since January 2020.
Now, a new study shows that this global problem is really hitting home.
The report, The Logistics Impact of COVID-19 on Small Businesses by the Canadian Federation of Independent Business (CFIB), finds that supply chain delays and interruptions are increasingly hitting small businesses in Canada, and ultimately consumers will have to pay.
“Recently, one of the more intensely felt impacts of the pandemic has been on supply chains and business logistics. If even one link in the chain, such as a factory producing vital materials, is delayed because business restrictions slow down or limit production, the entire chain can grind to a halt,” said Simon Gaudreault, senior director of national research at CFIB.
CFIB says problems getting and shipping products and managing inventory seen throughout the pandemic are getting worse.
In May, 41 per cent of business owners said they were worried about logistics, up from 29 per cent around the same time last year. In a CFIB survey in April of its 95,000 members, 55 per cent said they had experienced delays in the past 30 days, with 90 per cent of the delays coming from suppliers.
Statistics Canada has similar findings, reporting that in the first quarter of 2021, 25 per cent of private sector companies expect supply chain challenges in the next three months.
Wholesale, construction, manufacturing, retail and agriculture are the most affected. Six out of 10 businesses in these sectors have experienced delays, said CFIB. Shortages, scarcity and delays have pushed up the prices of goods, and businesses, already dealing with intense competition, restrictions and closures during the pandemic, may have no choice but to raise their own prices, said CFIB.
“On average, businesses indicated they will increase prices by 3.3 per cent over the next 12 months, the biggest increase we’ve seen since 2009,” said Gaudreault.