The consumer goods industry can be affected by price increases in related sectors
22 February 2018 – CHEP Romania, a subsidiary of the global leader in pallet and container pooling services, anticipates that the growth of companies operating within the Romanian consumer goods (FMCG) industry could be slowed by price increases in the logistics and transport sectors.
At a time when Romania is expected to record the highest increase in private consumption in the region this year (3.9%), pressures within the supply chain are expected to worsen in the period 2018-2019. CHEP has analysed the factors that influence the logistics and transport market and is highlighting the main trends that can affect the financing cost of goods distribution operations in the local market.
The purchase price of Euro-pallets continues to increase against the backdrop of the wood resource crisis, as a result of the changes made to the Forest Code, which pushed prices to a maximum level during the previous year, with an increase which is estimated to continue in 2018 to more than 400% compared to 2011. Another factor influencing pallet costs is the discontinuation of the exchangeability agreement between the European Pallet Association (EPAL) and the International Union of Railways (UIC), the pallet trademark holders which, together, formed the largest pool of transport equipment in the world. The end of the collaboration between the two organisations adds a new level of complexity to the management and acceptance of white pallets by traders. Pallets that present a qualitative risk (EUR-UIC) are overtaxed upon receipt by some retailers, a tendency which will continue to increase, making the entire white pallet management process more expensive.
The transport cost will increase, at a time when the shortage of personnel in the road freight transport sector has led, in recent years, to a reduction in transport capacities which are currently inadequate for the volume of products transiting through the intra-Community area. The year 2017 saw the lowest level of freight transport capacity in the Community market in last 7 years. The second factor that will influence the increase in road freight transport prices is the raising fuel prices as a result of the increase in excise tax on diesel and petrol. In fact, 2018 has started with an increase in the price of oil in the international market.
“The year 2017 brought a series of negative records that could significantly affect the growth of the FMCG industry. We are expecting that this market context will lead to the market being more widely open to collaboration, which is the only logistics strategy that secures deliveries at significantly lower prices, even in the context of an exceptional increase in the demand for consumer goods”, said Gabriel Andronescu, General Country Manager at CHEP Romania.
The manufacturers’ competitiveness may decrease as a result of external factors which influence the increase in costs within the supply chain. This competitive disadvantage will worsen for companies that pay an annual contribution for non-recycled pallets.
 Source: World Economic Outlook, International Monetary Fund
 Source: Fordaq Foresters Association, Romania (2017)
 Source: CHEP Europe