Europe's inflation headache not yet over as 8 in 10 supply chain professionals expect to pass on further costs in 2023
Europe’s inflationary environment is easing, but there’s still plenty of pressure to come from within supply chains finds new industry survey
The big inflationary hit to European economies as a result of the energy crisis and conflict in Ukraine is easing, but 81% of frontline supply chain professionals still expect to pass on costs to customers in 2023, while just 5% hope to internalise costs and not pass them on.
The result, which comes from a major industry survey of nearly 300 EMEA-based supply chain professionals conducted for the state of European supply chains 2023 free-to-download white paper, also broke down expected cost pass-throughs by sector. It found that while 74% of retailers and manufacturers expect to pass on costs, this rises to 91% of Logistics Service Providers (LSPs).
Furthermore, 25% of LSPs expect to increase prices for their customers significantly, compared to a much lower 8% of retailers and manufacturers.
Tight markets push inflation
This suggests that a large part of inflationary pressure in EMEA supply chains will come from overland transportation and warehousing, while retailers and manufacturers will take more action to reduce cost pass-throughs.
Respondents to the survey reinforced this by noting that they largely expect the market for EMEA warehousing to remain tight in 2023. Forty-four percent said that they expect a lack of capacity, versus 39% who expect too much space coming onto the market – a 5% difference.
Likewise, 13% more respondents expected inventories to increase rather than fall, underlining how inventory rundown will be cautious at best in the region and keep demand for industrial space elevated.
The white paper also notes that Europe faces an acute shortage of truck drivers that shows no signs of abating, as well as a tight labour market overall, which will feed into the inflationary picture.
Technology-powered networks a priority
These issues are driving the industry to get more out of existing assets and contracts. The primary transport initiative reported in the survey for 2023 is to conduct network optimisation, which 72% said would be a priority.
In order to conduct this optimisation, supply chain professionals need to have deep insight into their transportation and storage networks and then to rapidly turn that data around into operational or forward-looking insights.
That requirement is why the top five priorities for technology investment into EMEA supply chains are:
- Supply chain monitoring, tracking and visibility solutions – 68%.
- Forecasting – 48%.
- Process automation – 47%.
- Analytics – 37%.
For more insights into the core trends that will shape European supply chains over 2023, download the white paper for free here.