Last Updated on Thursday, 28 October, 2021 at 12:28 pm by Andre Camilleri
This week Chamber president Marisa Xuereb warned prices are expected to rise within the next year, that’s further than what we have already experienced since the onset of the pandemic. Right now, I am sure we are all feeling the pinch, whether that’s at the local supermarket or paying a few euros extra for a pizza, the money just isn’t stretching as far as it did. The pandemic has caused “drastic” increases, according to importers, with transport costs increasing “phenomenally” since the outbreak.
The reasons we see such a hike in prices are multiple. Covid-19 and Brexit are not the only factors pushing up food prices, but they have created the “perfect storm” for the industry. From increased shipping costs to the increased price of raw materials due to lower production and higher demand from emerging markets, Rising labour and wage costs due to employee shortages, the list goes on. Translation: They are paying higher prices, they are charging higher prices, higher prices are everywhere.
Eighteen months into the pandemic, you might be wondering why are there still supply chain problems? From alcohol to frozen foods, bananas to toilet paper, ultimately, as Ms Xuereb explained so well, things still can’t easily get to where they need to be. Across the board, ingredient suppliers see longer lead times because of lack of staffing, ingredient shortages, and the unpredictability of trucking and container ship transport. In many cases, those lead times have dragged out to eight to 12 weeks, with food manufacturers stalled out waiting for ingredients for their products. Many have pointed the finger at countries in the far east, such as China. While some importers have laughed this excuse off, saying they do not import from there, others say a good part of the problem revolves around it, with a spike in imports and shortages of packaging materials post-Covid-19, along with how they are handling the situation.
The reality is, before the pandemic, most people may not have considered where their food came from, how far it travelled or how it was produced. Certain industry phrases have underscored rising grocery bills over the past 18 months. “Turbulence and volatility.” “Unprecedented times.” But one of the biggies is “supply chain disruption.” The pandemic exposed the degree to which our global supply chains are fragile and lethargic in their ability to respond to unexpected changes in demand. Although disruptions are inevitable, we need to plan and react differently if we’re to ensure global economic resiliency in the future, we can longer bury our heads in the sand. We have to admit that with deep global economic interdependence, more serious disaster planning must become the defacto standard – even here in Malta.
Ultimately, from a business perspective, the lesson that needs to hit home is relationships. We can’t assume suppliers will always be there if we don’t treat them well during difficult times. Even the smallest vendor demands a new level of respect. How you nurture and respect every partnership within the supply chain makes a difference.
As Forbes recently reported, the last 18 months of the Covid-19 pandemic have shown us that we can no longer think about the supply chain the way we used to. We need to transform the pain of that experience into new ways of thinking about and acting on relationships in our complex global supply chains. Put simply, it’s imperative to build toward a more resilient global economy, and we can start doing our part here.