Operators Need to Brace Themselves for the True Cost of the Supply Chain
Operators need to come to terms with the true extent of inflationary pressures in the supply chain, and accept that suppliers can’t absorb the ongoing hikes in costs forever. More of the increases will have to be passed down the line.
This article was originally posted in October 2021 and was subsequently updated.
Since the beginning of the COVID-19 pandemic, the commercial vehicle supply chain has experienced unprecedented disruption – from the lack of components, labour shortages, supply chain bottlenecks, line stoppages, and changing legislation, for example.
In addition, it has seen dramatic rises in the price of raw materials and energy as well as increased costs as a result of supplementary cleaning and the provision of PPE.
Nationally, annual inflation (Consumer Prices Index) hit 9.2% in May. When applied to our industry, though, the ‘real’ number will be well north of this figure, fuelled by significant demand and corresponding increases in the global commodity pricing of steel, rubber, timber, resin, etc. As these increases are applied across our sector, the cost of vehicles, bodywork and ancillaries will continue to escalate significantly in the short to mid-term.
Currently, transport is one of the biggest contributors to inflation. Operators know only too well that fuel and driver costs have shot up (fuel to record highs) and they see the impact they have on their businesses every day.
However, whilst operators are busy passing on their visible increased costs, anyone who hasn’t bought a new truck or had a major service for a while, will soon discover there are deeper, hidden cost increases. These will manifest themselves when they come to either replacing a fleet or keeping an existing fleet on the road.
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