Supply Chain Disruptions Threaten COVID Recovery
(24 May 2021 – Australia) Australian enterprises are fighting to overcome a rapid increase in input costs across multiple sectors, directly impacting retailers as pandemic impacted global supply chains buckle just as demand recovers.
As businesses scramble to manage the shock by recalibrating their supply chains, ongoing global and Australian production issues will stifle the economic recovery and raise new headwinds as interest rates remain at generational lows and countries navigate the dual threats of the COVID-19 pandemic and trade wars.
Locally produced timber costs are up by up to 25 percent in H1 2021 alone, with more increases forecast, while imported timber is worse, with prices surging higher by 90 percent. The Australian government has launched a new agency to address shortfalls in essential goods while importers and exporters continue to review their operations and adapt to shifting trade corridors.
The Reserve Bank of Australia (RBA) acknowledged supply chain disruptions during their interest rate meeting on May 4, indicating it would cause a “short-term inflation bump”. “In some cases, the rebound in global goods trade had outstripped the ability of global supply chains to cope, which had contributed to delays and upward price pressures for key components such as semiconductors,” the RBA board said in a statement.
“It’s not like we haven’t had logistics shocks before. We’ve had plenty of local and domestic port strikes, or rail unavailability, or loss of access to raw materials. We’ve had all this before. But it hasn’t lasted long. This is very different. What we’re seeing is a reshaping of global and domestic supply chains. And as part of that, Australian businesses are looking at how they build far more resilience to deal with this shock” stated KPMG Australia Partner and ASPAC Head of Supply Chain, Peter Liddell.