The relief to supply chains from the pandemic is uneven, and it may take longer for inflationary trends to work through them, according to a report by Bloomberg. Most of the goods transported by container ship are under long-term contracts and those deals were renegotiated in 2021 and 2022 at much higher rates. This may mean that some retailers and manufacturers are not seeing enough shipping-rate reductions to warrant slashing prices further.
Another reason inflation remains sticky is due to labour costs. Many firms are facing enduring increases in one of their biggest costs: labour. Worker shortages are hitting the supply-chain industries hard and it’s time-consuming and costly to train new employees. Higher costs for diesel, industrial equipment and major capital expenses, like new and used trucks, still exist, according to the report.
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Reference: Bloomberg ,"Supply Chain Disruptions’ Impact on Inflation is Likely to Persist Despite Recovery", gCaptin, Feb 27th, 2023