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How Governments Can Help Business Recovery Affected by Logistics Issues

simon gaudreault cfib director
simon gaudreault cfib director

Simon Gaudreault, Vice President of National Research at the Canadian Federation of Independent Business (CFIB) talks about CFIB’s recent report on the logistics impacts of COVID-19 on small businesses.


With a “return to normal” on the horizon, what challenges do you foresee persisting for small businesses over the next year?

One of the more intensely felt impacts of the pandemic has been on supply chains and business logistics, and unfortunately, it is one that I do not see as magically disappearing overnight. If even one link in the chain, such as a factory producing vital materials in another country, is delayed because of ongoing restrictions or outbreaks, then the entire chain can be backed up for days or weeks on end.

And this is an issue that small business owners are well aware of CFIB data from May 2021 indicates that 41 percent of business owners are worried about business logistics, such as getting and shipping products or managing inventory, up from 29 percent in April 2020.

Your recent report on these challenges talks about what you call a “domino effect of delays”. Who is being affected on the latter end of these delays?

As our country moves towards economic reopening and recovery, we need to be mindful of the fact that these disruptions will add up for small businesses and significantly affect their operating costs. To avoid shuttering their doors completely, these increasing costs are going to inevitably fall on the consumer. On average, businesses indicated that they will increase prices by 3.3 percent over the next twelve months, the biggest increase we’ve seen since 2009. Small businesses are already in a precarious position due to the past fifteen months, and higher prices will further hurt their ability to rebound and make up lost sales.

Is there anything small businesses can do to mitigate these challenges?

Capacity and policy surrounding rapid testing have developed significantly over the past few months. Now more than ever is the time to capitalize on frequent testing in manufacturing and warehouse settings. Workplace outbreaks can grind production to a complete halt due to shutdowns that last a minimum of two weeks, often more. Rapid testing can help avoid these shutdowns. Physical distancing requirements could also be relaxed with more rapid testing, allowing production to increase and become more stable.

This is also an opportunity for the government to step in and proactively address what has the potential to be a real threat to economic recovery. By keeping taxes low and reducing red tape, such as internal trade barriers, governments will be able to offset some of the increasing costs facing small businesses.

 

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