Expect delays, shortages and even price increases in the next two to three weeks as the impact of the Suez Canal blockage kicks in.
That’s the warning from logistics and pricing analyst for Investec for Business, Denys Hobson.
The blockage has brought into sharp focus the vulnerability of global supply chains - and the unintended consequences of the trade passage blockage are likely to cause additional imbalances in the market, which over the last few months has started to positively reposition after Covid lockdown knocks, says Hobson.
“It’s difficult at this stage to understand the full impact on the SA market, but it’s clear that supply chains will be under pressure if we consider the delays this will have – given that some carriers may stop taking bookings till the route is clear, while others have already rerouted but may omit certain ports,” he said.
Importers are really going to feel the pinch, in his view. “The compounded impact of the unpredictability in the market is forcing importers to drop certain product lines as they are not feasible at the current rates - or look at alternative options to ensure cash flows remain liquid.
“Importers are operating very lean businesses at the moment and unfortunately they cannot keep absorbing unintentional costs. The additional cost pressures are becoming too high for the small and medium-sized importers. For those companies supplying bigger retailers with imported products, there is little or zero room to readjust pricing after orders have been placed,” adds Hobson. “As such, these costs and surcharges are likely to be passed down to the consumer in the coming months.”
In addition to cost increases, shipping delays, port congestion and probable production and supply delays will place further pressure on importers to import via airfreight in order to mitigate delay. “This will result in a demand surge for airfreight which will likely drive freight rates higher.”
