CSCMP's Supply Chain Quarterly
May 21, 2019
Forward Thinking

Rising supply chain costs will push up retail prices

Some manufacturers and importers plan to pass increases in logistics costs on to retailers and consumers, according to results of a recent survey.

Results of a new survey indicate that a spike in transportation and commodity costs could potentially push up retail prices by 10 to 15 percent for consumers this spring and summer. The supply chain finance company Capital Business Credit LLC came to that conclusion after polling more than 70 manufacturers and importers in early to mid-March. The respondents manufacture most or all of their products in Asia.

Sixty-two percent of respondents to the Global Retail Manufacturers and Importers Survey said that their logistics costs have climbed by more than 5 percent in the past year, in large part due to higher oil prices. Almost two-thirds of those respondents that reported higher logistics costs said that they would pass at least some portion of their increased costs along to the retailer and consumer.

"The rising cost of logistics will have a significant effect on manufacturers, importers, retailers, and consumers," said Andrew Tananbaum, executive chairman of Capital Business Credit. "Margins will be cut and prices will increase, causing stresses and cracks along the entire supply chain."

The survey also found that costs of raw materials, particularly cotton, have risen markedly. In fact, 94.5 percent of survey takers said that the prices they pay for raw materials had increased in the previous 12 months. Respondents said rising costs for cotton were of particular concern and would have a big impact on the price of certain consumer goods.

[Source: Capital Business Credit LLC, Global Retail Manufacturers and Importers Survey]

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