CFIB says supply chain risks will haunt Canada's small business recoveryClick image to enlargeSupply chain delays and interruptions are increasingly impacting small business operations and will result in higher prices, according to a report by the Canadian Federation of Independent Business (CFIB).

"Recently, one of the more intensely felt impacts of the pandemic has been on supply chains and business logistics. If even one link in the chain, such as a factory producing vital materials, is delayed because business restrictions slow down or limit production, the entire chain can grind to a halt," said Simon Gaudreault, Senior Director of National Research at CFIB. "As we move towards economic reopening and especially as government support is phased out, we need to be mindful of the fact that these disruptions add up and will significantly slow down many affected businesses as they are trying to go back to normal operations."

Business owners have become increasingly concerned about logistical issues, such as getting and shipping products or managing inventory, over the past year with 41 per cent of business owners saying they are worried about business logistics in May 2021, up from 29 per cent in April 2020.

This April, CFIB found more than half (55 per cent) of business owners had experienced delays in the previous 30 days, with the majority (90 per cent) reporting the delays came from their suppliers. Businesses in the manufacturing, wholesale, construction, retail and agriculture sectors were the most affected by delays.

Higher costs

Shortages, scarcity and delays have pushed up the prices of some raw materials and metals, like lumber or iron. As a result, many businesses may need to raise their prices to cover the additional cost.

"On average, businesses indicated they will increase prices by 3.3 per cent over the next twelve months, the biggest increase we've seen since 2009," says Gaudreault, adding that this would hurt small businesses' capacity to rebound at a time when many are in a precarious position due to the debt accumulated during pandemic.

CFIB says expanded rapid testing in manufacturing and warehouse settings can help by allowing companies to increase production. The organization also wants federal and provincial governments to help offset some of the logistics and pricing pressures by keeping taxes and other costs low and reducing red tape, such as trade barriers between provinces.

Read CFIB's full report, The Logistics Impact of COVID-19 on Small Businesses, for more details.

https://www.cfib-fcei.ca/sites/default/files/2021-06/Logistics-Impact-COVID19.pdf

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