Mehrere Container

War in Ukraine ex­ac­er­bat­ing sup­ply prob­lems

The lat­est sur­vey con­ducted by economiesu­isse shows that the dif­fi­cul­ties as­so­ci­ated with the ac­qui­si­tion of pri­mary prod­ucts and raw ma­te­ri­als have slightly eased, though they re­main at a very high level. How­ever, with the dis­con­tin­u­a­tion of most of the mea­sures against the corona pan­demic a much more pro­nounced im­prove­ment had been an­tic­i­pated. The war in Ukraine is now in­ten­si­fy­ing sup­ply prob­lems again. The busi­ness ac­tiv­i­ties of every sec­ond re­spond­ing Swiss com­pany have al­ready been im­pacted by the con­flict.

Com­pa­nies are con­tin­u­ing to strug­gle with sup­ply short­ages in 2022. Two-thirds of the com­pa­nies par­tic­i­pat­ing in the sur­vey re­ported that they are cur­rently ex­pe­ri­enc­ing dif­fi­cul­ties in procur­ing pri­mary prod­ucts. This fig­ure is lower than in No­vem­ber last year, but in view of the re­moval of the ma­jor­ity of the pan­demic-re­lated eco­nomic re­stric­tions, the level is still very high. This is pri­mar­ily at­trib­ut­able to the war in Ukraine, which is pre­vent­ing a rapid re­turn to nor­mal. Around 20 per­cent of the re­spond­ing com­pa­nies cited the short­age of spe­cialised per­son­nel as the sec­ond most sig­nif­i­cant prob­lem. By con­trast, sales dif­fi­cul­ties no longer play a no­table role.

The slight eas­ing of the sup­ply prob­lems is at­trib­ut­able to the re­lax­ation of mea­sures to com­bat the corona virus. The num­ber of par­tic­i­pat­ing com­pa­nies that cited the prob­lem of pan­demic-re­lated re­stric­tions in the coun­try of pro­duc­tion was down by around one-third ver­sus the pre­vi­ous sur­vey. Trans­port prob­lems and in­suf­fi­cient pro­duc­tion ca­pac­i­ties have also eased to some ex­tent, though these re­main at a very high level.

Ukraine con­flict as a new dis­rup­tive fac­tor

There is no ques­tion of an over­all eas­ing of the sit­u­a­tion in the near fu­ture. The war being waged by Rus­sia against Ukraine is giv­ing rise to re­newed hard­ship for many com­pa­nies: shortly after the Russ­ian in­va­sion, around 30 per­cent al­ready cited the con­flict as the cause of sup­ply short­ages. Around half the re­spon­dents stated that the con­flict is in­flu­enc­ing their busi­ness ac­tiv­i­ties – and 20 per­cent re­ported that their busi­ness ac­tiv­i­ties have been im­pacted to a major ex­tent. It is in par­tic­u­lar com­pa­nies in the chem­i­cals, ma­chin­ery, elec­tric­ity and met­als in­dus­tries, as well as food man­u­fac­tur­ers and whole­salers, that are being af­fected.

As be­fore, it is pri­mar­ily short­ages of raw ma­te­ri­als and ex­pend­able goods that are caus­ing prob­lems: 57 per­cent of the re­spon­dents stated they are suf­fer­ing from a lack of sup­plies of these goods, in­clud­ing items such as alu­minium and tim­ber, as well as op­er­at­ing equip­ment. This means that, down­stream, there is likely to be a short­age of var­i­ous durables such as ma­chines and semi­con­duc­tors. More than one-third of the re­spon­dents re­ported short­ages in this cat­e­gory. In ad­di­tion, due to the war in Ukraine, dif­fi­cul­ties now have to be an­tic­i­pated with re­spect to im­ports of crude met­als and metal-bear­ing raw ma­te­ri­als. And var­i­ous other prod­ucts are also likely to be in short sup­ply due to the con­flict, for ex­am­ple food­stuffs: Ukraine is a major sup­plier of wheat and ed­i­ble oils. Here, end-con­sumers will be in­creas­ingly hard hit. Around 25 per­cent of the re­spon­dents are al­ready re­port­ing short­ages of con­sumer goods.

Prices ris­ing sharply

Short­ages of goods in­evitably re­sult in price in­creases. Even be­fore Rus­sia in­vaded Ukraine, the prices of raw ma­te­ri­als and pri­mary prod­ucts were al­ready ris­ing sharply. And now the con­flict is also caus­ing sharp in­creases in en­ergy prices. Ac­cord­ing to the par­tic­i­pat­ing in­dus­try rep­re­sen­ta­tives, due to the in­creased prices of raw ma­te­ri­als and en­ergy sources, prices are cur­rently in­creas­ing in all sec­tors.

Pres­sure on prices is ex­pected to per­sist and ul­ti­mately af­fect the costs of end prod­ucts. For ex­am­ple, the chem­i­cals in­dus­try man­u­fac­tures prod­ucts from raw ma­te­ri­als, and their end prod­ucts – rang­ing from plas­tics to fer­tilis­ers – are re­quired for every­day use. This means that items such as elec­tri­cal ap­pli­ances, cars, bi­cy­cles, e-bikes, etc., as well as many food­stuffs, could be­come more ex­pen­sive. Trans­port costs will also rise: higher fuel prices mean in­creased costs of trans­port by sea and air, as well as by road. In ad­di­tion, the short­age of dri­vers al­ready being felt by many lo­gis­tics com­pa­nies will in­ten­sify due to the con­flict in Ukraine, and this will re­sult in fur­ther price in­creases. Com­pa­nies in all sec­tors an­tic­i­pate price in­creases by an av­er­age of around five per­cent in the com­ing six months.

Sanc­tions play a lesser role

The con­se­quences of the sanc­tions im­posed by West­ern states against Rus­sia are only be­com­ing grad­u­ally ap­par­ent. Around 25 per­cent of the re­spon­dents are af­fected by these sanc­tions. One of the fre­quently cited con­se­quences con­cerns pay­ment trans­ac­tions with Russ­ian banks. This af­fects both the fi­nance in­dus­try and ex­ports. Re­stric­tions in the avi­a­tion sec­tor are also hav­ing an im­pact: Eu­ro­pean cargo and pas­sen­ger air­craft can now only fly in Russ­ian air­space under cer­tain con­di­tions, and the ma­jor­ity of flights have to be di­verted to other routes. Fur­ther­more, ex­port bans have been im­posed, for ex­am­ple for dual-use goods. On the other hand, the tourism in­dus­try will suf­fer from the lack of Russ­ian vis­i­tors.

Many mar­ket par­tic­i­pants also an­tic­i­pate that, due to the sanc­tions, Rus­sia will soon no longer act as a sup­plier of raw ma­te­ri­als. In view of this, they are prepar­ing them­selves for a fur­ther global sup­ply short­age. This could con­cern oil and gas, as well as other im­por­tant raw ma­te­ri­als such as iron ore and nickel. Thus an eas­ing of sup­ply short­ages in the near fu­ture can­not be an­tic­i­pated. On the con­trary: due to the Ukraine con­flict, the short­ages are in fact likely to in­ten­sify. Al­most 80 per­cent of the com­pa­nies par­tic­i­pat­ing in the sur­vey ex­pect sup­ply prob­lems to per­sist in the com­ing six months.

To the de­tailed analy­sis of the sur­vey with ad­di­tional re­sults.

The sur­vey was con­ducted by economiesu­isse from 2 to 10 March 2022. 306 or­gan­i­sa­tions par­tic­i­pated, and the sur­vey en­com­passed all the re­gions of the coun­try. 13 in­dus­try as­so­ci­a­tions com­pleted the ques­tion­naire on be­half of the com­pa­nies they rep­re­sent. The eval­u­a­tion re­flects the cur­rent sen­ti­ment among Swiss com­pa­nies. The re­sponses were not in­di­vid­u­ally weighted and the re­sults do not claim to be rep­re­sen­ta­tive.