Finance Finance News Shoppers warned to brace for higher prices as COVID inflation hits warehouses

Shoppers warned to brace for higher prices as COVID inflation hits warehouses

Higher supply chain costs will soon flow through to checkouts, the owner of a leading e-commerce company says. Photo: Getty
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Consumers are being warned to brace for higher prices over Christmas as retailers pass on higher costs from COVID-19 and supply chain havoc.

As Australians prepare for a shopping spree when lockdown ends, there are new warnings retail supply chains are buckling under the pressure.

Everything from books to electronics and cosmetics may be affected.

E-commerce sales shot through the roof during Delta, pushing delivery warehouses like Australia Post to the limit amid the ongoing impact of COVIDSafe plans on supply chains in Australia and around the world.

Now Jam Pathirana, CEO and founder of e-commerce warehousing firm B Dynamic, is warning consumers will soon be paying higher prices for the increased costs facing businesses in retail supply chains.

Mr Pathirana’s company handles logistics and delivery for a range of big brands, including Aldi, Dymocks and Proctor & Gamble – a consumer goods company that owns brands such as Gillette and SK-II skincare.

He told The New Daily his operational costs have risen 30 per cent because of COVID safety measures B Dynamic is required to introduce.

“It’s a significant increase,” he said. “Our COVIDSafe strategy forces us to do things totally differently.

“We’re not the only ones affected, our suppliers are also experiencing cost increases and they’re already passing that onto us as well.”

COVIDSafe comes at a price

Operating a business these days comes with a range of costs that didn’t factor in before the pandemic, including personal protective equipment, deep cleaning costs and operational disruption from social distancing.

Mr Pathirana said companies like his have been absorbing many of these costs during the pandemic because their supply agreements with retailers are negotiated on contracts that typically last about two years.

But many of these contracts are now coming up for renewal, and when they do retailers will be quoted a higher cost base, increasing the price they pay for the goods that find their way to stores or your doorstep.

This will eventually flow through to the checkout, Mr Pathirana said.

“This is going to be part of our lives going forward,” he said.

“COVID inflation is something you need to consider for any business.”

Mr Pathirana said he’s doing everything he can to innovate, build scale and reduce the cost increases that are passed on, but said it’s unlikely businesses in the warehousing industry will be able to eliminate the rise.

Jam Pathirana, CEO B Dynamic, says consumers must brace for higher prices. Photo: Supplied.

Shipping mayhem

These are just the latest warnings from business owners about higher prices and shipping delays for shoppers heading into Christmas 2021.

A combination of soaring e-commerce demand during Delta lockdowns and sky-high prices for shipping containers coming out of China has put retail businesses in a difficult spot, prompting them to urge customers to begin their Christmas shopping several months before December.

Paul Zahra, chief executive of the Australian Retailers Association (ARA) has urged consumers to be patient with retailers navigating COVID-19.

“If you want a specific brand of ham you may have to settle for a different brand,” Mr Zahra said.

“The supply chains have been understandably disrupted.”

Last week the local impact came into focus when Australia Post said it would temporarily pause parcel deliveries in Victoria due to a backlog of orders – repeating a step it was forced to take last month in NSW.

Photos hit social media showing huge parcel backlogs in Australia Post warehouses as the government-owned company deals with higher demand while paying thousands of staff to isolate because of COVID.