Evaluating the impact of increasing freight prices due to disruptions in the global supply chain on our competitive power, Ömer Karadeniz, Chairman of the Plastic Industrialists Federation (PLASFED), stated: "Due to freight costs, producers are facing significant difficulties both in sourcing raw materials and semi-finished products and in exports beyond our immediate geography."
Pointing out that approximately 85% of the raw materials needed by the Turkish plastic sector are met through imports, Ömer Karadeniz added, "Our sector converts these imported raw materials into value-added plastic products, either directly or indirectly for export. This industry is strategically important as it enables more than 30 other industries, where it provides intermediate inputs, to be more competitive in foreign markets, and it also prevents our manufacturers from facing supply issues through domestic production. Furthermore, the disruptions in the plastic sector’s supply chain are causing a domino effect, leading to production delays in almost all manufacturing industries. Additionally, price increases in plastic raw materials or in the supply channels of these products are reflected as inflation to consumers in the medium term. From this perspective, the exorbitant increases in international transportation costs negatively affect our export competitiveness and also contribute to inflation due to their impact on the costs in strategic sectors like the plastic industry," he said.
Increasing freight prices shorten the supply chain
Stating that increasing freight prices lead to a shortening of the supply chain, which brings both risks and opportunities for our country, Karadeniz noted, "The rapidly rising access costs of Southeast Asian countries to European markets due to increasing freight prices gives our country a relative advantage in this market in terms of competitiveness. On the other hand, the increase in transportation costs from our country to Europe may further shorten the supply chain and cause our country to lose this market share to competing countries. A more significant risk for our country is associated with the need for imported intermediate inputs and raw materials essential for continuing production. Indeed, the increased freight costs are causing inflation in producer prices through the raw material supply channel and making it lose its advantages against distant geographies. Therefore, immediate measures should be implemented to minimize the impact of the rising freight prices on both raw material supply and access to export markets to seize this window of opportunity. Furthermore, the production of critical industrial inputs like plastic raw materials should be encouraged, and more facilities should be added to the one planned to be established in the Adana Yumurtalık region," he stated.
Cost increases in production may reflect on consumers
Emphasizing that producer price inflation has diverged negatively from consumer inflation over the past year and that consumer inflation has almost reached 2.5 times the producer inflation, PLASFED President said, "In this past year, we have observed that producers' profit margins rapidly eroded as they did not reflect the cost increases in prices. It seems very likely that producers will not sustain this cost increase for long without reflecting it in prices. Moreover, we can anticipate that the already high producer inflation will rise even more due to the impact of freight prices on input costs. Given that consumer inflation stems from input costs, measures must be implemented urgently to lower our producers' costs."
Translated by Artificial Intelligence
