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Let the supply chain disruptions motivate you to take action

Posted by: Danielle Moore at February 17, 2022

At the start of the year there are always predictions about what will be the hot topics likely to consume us over the coming months. Last year it was clearly Covid. This year it’s going to be supply chain disruptions. Even armchair experts can now quote how much more it costs to ship a container than last year and how much more importers and exporters are now paying.

A recent article in Business Insider says two out of three Aussie businesses were disrupted by supply chain chaos this year and experts are warning the crisis will continue well into 2022. Furthermore, as seen in the AFR, the recent floods in South Australia washing away parts of the railway linking system between the eastern states and Perth, have further intensified our already strained network. As a result, we are likely to see disruption on a scale we have never seen before.

A recent survey of 346 CEOs found that 52% expected import distribution issues to continue into the year. Just over a quarter of those surveyed are building up stock levels so they’re not caught short but, alarmingly, another 26% aren’t planning on changing their processes at all. They’ve simply delayed bringing goods into the country while they wait for prices to fall.

This is highly unlikely to happen, which means they’ll end up importing the goods anyway, but at even higher prices. Most anticipate passing these costs onto consumers, which in turn will fuel inflation.

This evidence of our reliance on overseas goods is adding to calls for Australia to move back into production and manufacturing and become more self-sufficient. While globalisation worked well when all the cogs were turning together, Covid has thrown a hand grenade into the finely balanced world of international freight and logistics and shown us just how vulnerable we are. This vulnerability will be particularly evident this year in Australia with disruptions to freight within the country also due to the AdBlue shortage.

One thing is clear – we need to become less reliant on China and Chinese products. This will hurt initially through an increase in our cost of living, as we have developed an unhealthy appetite for cheap Chinese goods. However, this is a painful transition we will need to endure to become more self-reliant and protect ourselves from the macroeconomic factors impacting world economies.

An important question is what your is business doing to protect itself? How are you futureproofing yourself from future shocks like Covid? Here at Rebus Capital, we’re across a number of key industries like agribusiness, construction, healthcare, and technology and have a good understanding of what’s happening in the market and what the opportunities are.

We will work alongside you to help you think differently about the challenges you face and put a plan in place to protect your business and help you grow.

Take the time to reflect on where you are now and where you’d like to be, then get in touch for a talk. We’re across the big issues like the supply chain crisis and how they’re affecting our business and also our clients. We’d love to get together to share ideas and put a strong plan in place to protect your business in 2022 and beyond.

Danielle Moore

The Trustee for the Rebus Capital Partners Unit Trust ABN 88 452 904 420. Authorised Credit Representative 523233 under Australian Credit Licence 536100.