10 December 2021

Southland businesses grapple with increasing costs

Labour shortages, shipping congestion and wage increases are piling up on Southland businesses – and there’s no end date in sight, Southland’s Chamber of Commerce says.

The Southland Chamber of Commerce’s quarterly Business Confidence Survey for November found all businesses surveyed average costs had gone up in the past three months, with 86 per cent of businesses expecting them to continue increasing.

Southland Chamber of Commerce chief executive Sheree Carey said labour shortages coupled with rising shipping prices were pushing costs upwards and constricting the growth of the region.

The labour shortage was across all industries and was expected to get worse, with 86 per cent of businesses finding it harder to find skilled or specialist staff compared to three months ago.

Businesses were having to pay premium wages to retain staff, which had pushed labour costs upwards, she said.

“We need more clarity from the Government about changes to visa’s going into next year … or as a region we can’t grow,” she said.

Adding to the increase was the rising cost of shipping as worldwide congestion in major ports due to Covid-19 outbreaks put containers at a premium.

Businesses had been fronting the costs of increased shipping in order to not price themselves out of the market by passing them on to overseas consumers.

“But it’s getting to the stage where they’re asking ‘how much of a hit can we take?’,” she said.

360 Logistics Group Southland branch manager Dave McCallister said in the past three months the cost of a 20-foot shipping container has gone up about $3500, “worst case scenario”.

There would be no remedying the situation until consumer demand decreased, and more freight became available, which he could not see happening in 2022.

“How long is a piece of string? There’s no end date in sight,” he said.

“It’s a tough space to be in at the moment … people’s tolerance are starting to wane.”

Published by Stuff.co.nz – 9 December 2021