Canadian industry sources say that while the Suez Canal has resumed shipping, the global trade woes associated with the COVID-19 pandemic are not over, and supply chain disruptions could soon hit Canadian consumers, who could see across-the-board price increases for all household items, from Home furniture to toilet paper.
On Monday, the world breathed a sigh of relief when a giant 400-metre-long container freighter finally resumed service after blocking the canal for nearly a week. But experts warned that the ripple effect of the incident on global shipping could take weeks or even months to clear, as the blockade caused a backlog of hundreds of ships lining up to pass through the key shipping lane, which accounts for about 12 per cent of global trade.
“The Suez Canal issue is only a small part of a larger problem,” said Diane Brisebois, chief executive officer of the Retail Council of Canada.
In North America, COVID-19 restrictions are slowing the unloading process while consumer demand for goods is soaring, said Shawn DuBravac, chief economist for IPC, the electronics manufacturing industry association. While consumers are spending less on services such as restaurants and entertainment because they are stuck at home, they are spending more on household goods, he said.
“Demand for commodities is actually higher now than it was before the pandemic.”
Manufacturers and logistics companies worldwide are facing a shortage of shipping containers. Despite China’s rapid emergence from the outbreak, many of its trading partners are still enforcing COVID-19 restrictions. According to a report by Asian logistics company Hillebrand, containers carrying exports from Asia to Europe and North America cannot be returned quickly.
In Canada, retailers have also been on alert for a possible strike by workers at the port of Montreal, a port where workers rejected their maritime employer’s latest labor contract on March 21.
Brisebois said the trade backlog means Canadians will see higher prices for a variety of goods, from home furniture to clothing and electronics to fitness equipment.
Most retailers have already said there will be double-digit percentage increases in shipping costs.
Brisebois warned that if the current situation continues for a full year, “eventually these increases will be passed on to consumers.
For some items such as home furniture, consumers are already facing longer wait times and may now find themselves out of stock.
Here are the products that may be affected.
Home furniture
If you have your eye on a particular sofa, fabric or leather set, you may need to be a little patient.
Regina-based home furniture store Continental Furniture advises customers to plan ahead, saying its 70,000-square-foot store and large local warehouse make the store better managed than its competitors. The store’s manager said it is placing orders much earlier than usual and is looking for potential sources of diversified suppliers, especially in light of a possible strike by workers at the Port of Montreal.
The Epidemic is a double-edged knife, and furniture retailers are doing better, but global trade congestion is causing supply to fall behind the growth in demand. Many producers have been forced to cut production due to a lack of raw materials such as lumber, as well as under COVID-19 safety standards, and longer shipping times once shipped.
In addition, weather factors, such as snowstorms and major power outages in Texas, led to production shutdowns at manufacturers of chemicals used in mattress foam. Honda and Toyota automakers also shut down production due to bad weather.
As raw material and transportation prices have risen, some suppliers have shifted costs to consumers. Supply disruptions are expected to last for six months.
Toilet paper
Container shortages are starting to hit the most sought-after commodity of the epidemic: toilet paper.
Suzano, the world’s largest producer of Brazilian pulp, recently said it would delay shipments due to competition from cargo ships.
The good news is that Canada has local manufacturers of toilet paper, but it still has to import some of it, so the price of some toilet paper products will go up, or the selection will be reduced.
Imported beer, cheese, coconut milk
For Canadians, fresh Food is currently imported from the U.S., Mexico and Central America primarily by truck or rail, so issues affecting global shipments will have a limited impact on the Canadian food supply chain.
However, some food products imported through ports or containerized cargo ships, such as imported flour and yogurt, will still be affected.
Industry experts say that supply disruptions may not immediately affect supermarkets, but will affect the purchase of some commodities in six to 12 months’ Time. Cheese and beer imported from Europe, or coconut milk from Southeast Asia will also be affected.
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