Hurricane Ian and Fiona Experts say it could cause grocers delivering food from Atlantic Canada and the southern US to pass higher costs on to Canadian consumers, as some east coast businesses begin rebuild their devastated industries.
Any interruption to supply chainwhich has seen major improvements in shipping costs and reliability over the past six months, which is thankfully expected to be brief.
Fraser Johnson, professor of operations management at the Ivey School of Business, told Global News: “The effects of things like hurricanes tend to be short-lived.
That could be chilling consolation for Atlantic Canada’s fishing industry, which was devastated when Fiona, then classified as post-tropical storm, which made landfall on the east coast over the weekend.
The entire harbor in Newfoundland’s Port aux Basques was washed ashore when two-meter storm surge hit shore and will need to be rebuilt. Others have seen fishing gear and entire ships washed out to sea or washed up on land.
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Fisheries Minister Joyce Murray said on Thursday that it would take longer to assess the full extent of the damage to the fishing industry, but added that she was open to working with fish harvesters across the region as required to extend the crop.
Sylvain Charlebois, director of the Agro-Food Analysis Laboratory at Dalhousie University in Halifax, experienced devastating winds and torrential rain from Fiona, recalls in an interview with Global News how the storm was arrived in the middle of the night and forced him to leave his house. no electricity for five days.
For residents in the Atlantic provinces, prolonged power outages mean shorter shelf lives of food in refrigerators and freezers. The need to throw away food comes at an expensive time for households, as the cost at the grocery store is 10.8% year-on-year increase in August, new 41-year high.
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Charlebois said he was happy to see Nova Scotia offers $100 to help families those who lost power during a storm replace spoiled food.
“It sends a strong signal that food and food security is very important to the province,” he said.
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Charlebois says September is probably the worst time for a major hurricane to hit the east coast from an agricultural perspective, as crop harvests can be delayed or completely lost on some farms. .
He noted: “The potato harvest was going well on Prince Edward Island when the storm made landfall.
“PEI is the largest potato supplier of all the provinces in Canada. So obviously potato production will be affected by Fiona,” he said.
Residents of the Maritime provinces could also be left stranded for longer while waiting for supplies if roads and other transport routes are disrupted by fallen trees and debris, Charlebois added.
A Halifax Port Authority spokesman confirmed to Global News in an email this week that the shipping hub resumed operations on Sunday morning after the Fiona was briefly halted, adding that no cargo ship deliveries should be cancelled.
Ian’s devastation in Florida and other parts of the United States has forced companies with operations in the region to halt some operations.
This includes Amazon, which said this week it will close some of its sites in Florida, as well as agri-food giant Cargill, which has closed several facilities in the state.
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Analysts also told Reuters this week that Hurricane Ian is expected to do worse than what has been forecast as the state’s smallest orange crop in 55 years. As a result, the price of orange juice futures has skyrocketed in the last three trading sessions.
In addition to citrus products, Florida is an important source for Canada when it comes to avocados and other fresh foods, Charlebois noted.
Canadian importers will adapt to disrupted supply chains outside of Florida and find other producers to make up for the loss, Charlebois said, but that could come at a cost.
The Canadian dollar has fell to a two-year low against a strong US dollargiving importers less purchasing power when negotiating new supply contracts.
“We import a lot of food from Florida. And as we’re looking at Ian’s rampage, we’re expecting some issues there,” Charlebois said.
“When that happens, you have to go elsewhere. And when you go elsewhere to buy whatever you need, you are likely to pay more… That will really affect the final retail price.”
Ivey’s Johnson says it’s not just a direct increase in the cost of imports, but it could see major hurricanes drive up prices at grocery stores.
The Gulf of Mexico is home to many oil and gas wells, which can have a direct impact on gasoline prices during disruptions. BP and Chevron are among the producers that removed staff from their oil rigs in the region earlier this week ahead of Ian’s arrival.
The price of regular gasoline increased to 19 cents yesterday in several Canadian cities and achieved a record 239.9 cents/liter this week in Metro Vancouver; An expert from the CAA points to the impact of two storms that disrupted gas supplies to some markets.
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Johnson told Global News that higher gas prices hurt the profit margins of grocery stores as trucking and logistics companies pass fuel surcharges to the stores themselves.
“Therefore, they have to pass these costs on to consumers,” he said. “You could see some short-term spike in your grocery costs.”
In addition to larger grocery bills, Johnson said there could be a spike in prices due to demand for lumber and other supplies as materials needed for rebuilding are needed for repairs. homes and other buildings damaged in the storm.
The supply chain is now in better shape than last year
Johnson said that while the impact of major hurricanes on the supply chain can be intense, they also “tend to be short-lived.”
“Supply chains tend to recover from short-term disruptions fairly quickly. So anything that you might see a spike in energy prices or even food costs is not going to happen to us two or three months from now,” he said.
And while the hurricane duo could pose some serious difficulties for some Canadian importers, from a broader perspective, experts say the global supply chain is now in a much better position. compared to this time last year, when Canadians were warned of holiday shopping season shortages.
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Charlebois said the lifting of COVID-19 restrictions has made shipping much more “predictable” than it was six months ago. Compared to that time, the cost of shipping abroad today is usually 40-50% lower and the cost of road transport is up to 20% cheaper, he said.
“Things are less complicated, which helps when you have to deal with something like a hurricane,” says Charlebois.
Johnson agrees, saying most retailers are in “a much better position this year than they were last year”.
While shortages of some critical equipment such as semiconductors remain a concern, retailers like Walmart and Target are reporting oversupplied inventories heading into the fall.
As a result, Canadians could find deals in the coming weeks, he said, as retailers look to eliminate their existing supply and make room for holiday inventory.
– with files from Global News ‘Anne Gaviola, Canada Press’ Rosa Saba and Reuters
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