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Supply Chain

Transport, Energy Costs Weigh On Irish Food And Drink Sector, Study Finds

More than a quarter (26%) of Irish food and beverage firms have faced transport and shipping cost increases of 20% or more over the past year, a new study by Food Drink Ireland (FDI) has found.

The study found that the Irish food and drink industry has faced 'substantial input costs increases' over last 12 months, with Brexit, COVID-19, raw material shortages and other supply chain constraints taking their toll.

The findings were revealed in a survey of FDI member companies in July.

Transport And Shipping Costs

In terms of transport and shipping costs, close to a quarter of respondents (23%) said that costs have increased by between 10% and 20%, while close to a third (30%) cited cost increases of between 5% and 10%.

Elsewhere, in terms of raw material costs, some 15% said that they faced substantial cost increases of 20% or more, while 40% identified cost increases of between 10% and 20%, and 26% cited cost increases of between 5% and 10%.

Energy costs rose by more 20% or more for 22% of respondents, and between 10% and 20% for 41% of respondents; and packaging costs were up by 20% or more for 11% of respondents, and between 10% and 20% for 44% of respondents.

In terms of the factors that they deemed most relevant to the current cost impasse, respondents were pretty much unanimous – 100% considered Brexit to be 'very relevant' or 'relevant' to cost increases, while 96% considered COVID impacts 'very relevant' or' relevant' and 96% considered global supply chain constraints 'very relevant' or 'relevant'.

Brexit Impact

'Brexit has added significantly to trading costs including transport and logistics and additional administration both for trade with the UK but also for trade with the EU using the land-bridge,' FDI said in a statement. 'Transport costs have also been affected by the major driver shortage impacting that sector and for international business, the cost of freight containers has exploded since the beginning of the year.

'Food businesses are also identifying strong increases in utility costs, in particular energy and also in packaging.'

Paul Kelly, FDI director, added that respondents expect a "continuation of inflationary trends" in the months ahead, calling for increased funding from the Brexit Adjustment Reserve to be made available, as well as a renewed focus by government on reducing the cost of doing business in Ireland.

© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Supply Chain news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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