Adapting to Price Hike Reality - No Time To Pause
“As the economy recovers from Covid-19 Pandemic, Businesses face challenges with escalated prices & delays in the business partnership.”
The Covid-19 vaccine rollout is a piece of great news for all of us. However, the world is still facing a consequential pandemic as well as an economic downturn. The rising business optimism across the GCC then provided robust growth to the economy. The situation turned grim with the onset of the pandemic.
As even now when we are united to fight against this situation, many challenges are hitting businesses around the globe. Building materials companies are also no exception to the same. The line of the positive expedition is now put in front of the entrepreneurs where the sole answer to survival is “ No time to fear the cause, No time to Pause” Doing what would suffice to solve the current problem of unprecedented price hike was to- “accept the reality and adapt to the changes”.
Different Verticals to Rising Business Challenges
- In 2020, as a result of the container rate surge and a spike in the prices, there was a situation of congestion seen with the logistic sector simultaneously bringing a substantial increase in the overall shipment prices. The rates were high going up from 1.000$ to 4.500$ at a continuous pace which was never seen before.
- The spark in the present situation had a hand to share with far-reaching currency impact. The strengthening of the currency of a country was seen bringing fluctuations to the imports and exports where exporters were left with the only choice to increase the price. Earlier as it was seen the Chinese currency experienced a drop with 1 Dollar= 7.5 Yuan to 1 dollar= 6.5 Yuan helping the manufacturers to increase the price.
- Today with the container prices standing still, steel prices have gone up hitting the ongoing projects and shooting up the development cost. The steel prices went up by 20% and the climb in the development cost which is 2 % was quite high for any developer to hold on to. The way the container rates have shot up in China and India was unprecedented and was the first time reaching the sky levels.
- Amid the alarming Covid- 19 lockdown situation, a shortage of the number of laborers is seen affecting businesses even now in 2021 on a considerable level with the labor cost surging up.
- After lockdown as the countries reopened their ways by releasing the strict covid lockdown restrictions, the prices of Brass went up which became one of the major reasons in the present time, making the situation even more difficult to counter.
The Path Ahead
The sharp escalation in the freight prices and the overall upturn has caught us and all similar businesses in a situation where we have to accept the reality and move ahead with the 25-30% hike.
I have always believed that the economy of any country goes up when the prices go up and this considerable escalation in the prices results in a major level of change. The undue rising demands lead to this change. Whenever there is a demand the prices go up and when there is no demand the prices are down. At this point maintaining a stronger foundation of the current business partnership is the need of the hour. Understanding the situation and the requirement, businesses need to make a mutual relationship with the suppliers to survive the situation in such a way where both parties are not bearing the burden of this direct hit. True business leaders should be patient and adapt to changes foreseeing the situation.