Inflation and supply chain scarcity issues

[Country Lad]

Interesting article covering supply chain problems and inflation. Comment on supply shortages and social media is enlightening. Essentially, if social media says there is a shortage then those shelves will remain empty.

All round a sensible article, not necessarily saying inflation will be rampant, just talking about the possibility, causes and impacts.

 

[mullokintyre]

Scotts Refrigerated Logistics have gone into Administration.
Not sure if anyone saw this coming.
from The Australian

One of Australia’s biggest trucking companies, Scott’s Refrigerated Logistics, has been plunged into receivership, threatening 1500 jobs and supermarket supply chains.
ScottsRL supplies all major supermarkets, including Woolworths, Coles, IGA and ALDI as well as Foodbank Australia. It is understood the company has engaged in high level talks with grocery executives about its collapse.

Supply chain disruptions from pandemic-fuelled labour shortages and wild weather have been one of the key drivers of grocery inflation as well as stock shortages. It is expected ScottsRL’s collapse will be one of many this year as the Reserve Bank’s nine consecutive interest rate hikes begin to bite.
Coles chief executive Steve Cain said the company was working with its suppliers and state and federal governments to “improve food supply chain resilience for all Australians”.

“Many of our suppliers are however still facing increasing cost pressures and shortages of pallets, raw materials and labour. This has been coupled with increased severe flooding impacting our road and rail networks, particularly for Western Australia and Far North Queensland,” Mr Cain said at Coles’ interim financial results last week.


According to CreditorWatch, business to business receivables are at their lowest point since it began collecting data in 2015 and external administrations are expected to continue trending upward this year as businesses come under pressure from the Reserve Bank’s aggressive interest rate hikes.

CreditorWatch chief executive Patrick Coghlan said trade payment defaults are up 39 per cent year-on-year, while credit inquiries have surged 129 per cent, indicating a tough year ahead for businesses.

“The upward trend in trade payment defaults, in particular, should definitely be of concern to business owners,” Mr Coghlan said.

“The RBA’s tightening of monetary policy is beginning to bite, on top of other challenges like labour shortages and supply chain disruptions. We will hopefully see inflation peaking soon, followed by an improvement in business and consumer confidence. It is important to remember that the Australian economy is still in a much better position than most.”

CreditorWatch chief economist, Anneke Thompson, said the high trade receivables and trade default data provided a strong indication that “we are now well past the peak of business conditions”.

“One of the likely results of this slowing of business activity is rising unemployment. Again, employment conditions have been extremely tight, so any rise in the unemployment rate will likely still see the rate at very low levels in overall terms,” Ms Thompson said.

“It will also dampen wage growth, something the RBA Is very keen to keep at moderate levels so as not to induce a wage-price spiral.”

One mgiht expect there is still some inflation in the pipeline as Logistics and drivers start to think they need to increase their prices to keep solvent.
Mick

 

[frugal.rock]

Slightly related. There used to be a shortage of pallets.
Saw a semi loaded sky high with brand new LOSCAM pallets the other day on the Hume Highway.
Heard a while ago that the input cost to make pallets had gone up lots. 2 to 2.5 times I think?