Shoppers face price hike after Christmas

A LEADING retail analyst has warned huge disruptions to global supply chains will likely continue into 2022, forcing Australian retailers to assess whether to bear cost increases or pass them on to customers.

It comes as supply chain disruptions have constrained the access to shipping and resulted in a fourfold rise in shipping container prices for Australian suppliers – smothering the sector with an extra layer of inflationary pressure.

Jarden analyst Ben Gilbert said many manufacturers, especially those that supplied supermarkets, would probably be swamping the leading chains with requests for price increases after Christmas.

The supermarkets – such as Woolworths, Coles and Aldi – would need to assess whether they could pass on price increases to customers, thereby ring-fencing their profit margins, or risk customer loyalty.

Addressing a roundtable discussion on the retail sector on Monday, Mr Gilbert said he believed shipping and freight constraints experienced since the Covid-19 pandemic emerged would most likely drag out well into 2022.

“The challenge you find now is that a lot of companies would have booked out or had freight rates locked in,” he said.

“A lot of these contracts are now rolling and you are moving from a situation where you have rates pre-pandemic to this more closer to spot (prices), so there are material increases coming through in freight.

“All the press and reading points to (shipping) delays continuing for six months, plus as you try to unclog some of these shipping lines, it is a challenge still out of China and the US.”

Retailers and suppliers in the most recent reporting season have complained about disruptions to the supply chain caused by Covid-19 which has put a rocket under shipping container costs.

As well, it is becoming more difficult to gain access to containers and ships coming to Australia from Asian factories.

Earlier this year, Kmart chief executive Ian Bailey conceded it was increasingly harder, and more expensive, to gain access to containers to bring in goods.