Food wholesalers across Australia are confronting international supply chain disruptions and price rises just as business picks up following the extended lockdowns in Melbourne and Sydney that obliterated profits over the past 18 months.
The sector was heavily impacted by the forced shutdowns in the hospitality industry due to the pandemic. But now that lockdowns are over, the industry’s woes are being exacerbated by significant COVID-related supply chain disruptions arising from state border closures, industrial disputes on the wharves and staff shortages at many Australian delivery services.
The capping of incoming cargo flights has also put significant pressure on the shipping industry and led to container costs escalating by up to four times, leaving local Australian wholesalers looking towards alternate higher priced domestic products.
With Christmas being the most profitable time of the year for this sector, all of the supply chain disruptions, product disruptions and price increases are significantly threatening to derail much needed cash flow this year.
Raw material shortages have also made it exceptionally difficult for manufacturers to increase production to meet the sudden increased demand as the states come out of lockdown. In NSW and Victoria manufacturers lost 25-60 per cent of their employees during lockdowns, forcing production to cease or slow down.
Anne from Newly Weds Foods, a food manufacturer in Wetherill Park NSW, highlighted how “departments have experienced a lot of disruption with raw material supply and have incurred a lot of additional expenses and time lost due to onsite COVID tests and isolation periods”.
On top of its own issues, the food wholesale sector is heavily reliant on the hospitality industry for its demand. Hospitality was one of the industries most adversely impacted during COVID lockdowns and consequently has one of the highest rates of default. Hospitality businesses are suffering from the disruptions in the food supply chain wholesale sector as well as reduced cash reserves, labour shortages, higher COVID-compliance costs and tighter margins as a result.
CreditorWatch’s credit risk management tools can help food wholesalers avoid supply chain risk when trading with hospitality sector businesses. Facilities such as monitoring and alerts and ApplyEasy allow them to stay on top of their finances and cash flow. Monitoring, in particular, is very important at a time when there is increased risk but businesses might be in different shape to what they were pre-lockdowns.
CreditorWatch’s ApplyEasy tool automates client onboarding, allowing you to streamline customer acquisitions by transforming your paper credit application process into an online form. This simplifies the credit application process for your customers and improves your internal credit process, reducing the risk of missing information and vulnerabilities.
CreditorWatch also provides customers with monitoring and alerts tools that allow them to be more aware of the early warning signs of customer cash flow problems. Businesses can set up alerts so they are notified as soon as an adverse change to a customer’s details occur.