Fuelling price hikes - how inflation is challenging the marine services industry
by Greencorp Marine 7 Dec 2022 08:56 PST
Consumer prices, G7 economies and OECD © OECD
As price increases and supply-chain disruptions put the heat on the marine services industry, smart players are turning to alternative, cost-effective products to keep customers happy and ensure budgets don't blow out.
A perfect storm of price hikes, supply-chain bottlenecks and labour shortages is hitting many businesses - and the marine services industry is not immune.
This disruption to supply chains shows no signs of easing and, combined with heavy order backlogs, poses a challenge to the marine industry and associated service providers as they seek to keep up with demand and remain profitable.
On the economic front, year-on-year inflation increases are among the highest they have been in four decades as central banks around the world continue to impose interest rate hikes to bring inflation under control.
The positive news for marine services providers is that demand for boats shows no signs of dropping off, and there is every expectation that boatbuilders will be able to manage rising interest rates and pass any higher input costs on to the consumer. Markets are tough, though, and it pays to be informed and agile.
Inflation hampering growth
So, let's first consider the broader economic headwinds and the impact they may have on everything to do with boats. The OECD's Economic Outlook for June 2022 considers the flow-on effects of Russia's war on Ukraine, projecting that global growth will decelerate sharply to about 3% this year and to 2.8% in 2023, well below the recovery projected in the previous analysis last December.
The OECD comments: "Further increases in food and energy prices and persisting supply-chain bottlenecks are key factors causing consumer price inflation to peak at higher levels and remaining high for longer than previously projected."
Their economists are now warning that, in some advanced economies, inflation could reach levels not seen since the 1970s. The hike in prices is graphically illustrated in Figure 3.
One positive note is that cost pressures are forecast to start easing next year as rising interest rates do their job. However, core inflation is still projected to remain at or above central bank target ranges in many major economies.
How marine industry businesses can cope
What does this all mean for marina owners and other businesses aligned with the boating industry? To stay competitive, the immediate focus should be three-fold:
- retaining staff thorough factors such as competitive salary packages and flexible work conditions
- ordering ahead to ensure you have a stockpile of in-demand items, which will require careful management of storage space
- implementing procedures to seek pricing alternatives from multiple vendors.
More broadly, as macro-economic trends and local business issues converge, it will be critical for marina owners to evaluate and anticipate what impact such forces could have on their growth and viability.
There is little doubt that ongoing supply-chain issues and cost increases could affect marinas' momentum and growth potential, while local environmental conditions could also pose disruptive risks for their operations.
In response, smart players should be considering any emerging opportunities - remembering that it is not all doom and gloom - and put the spotlight on short- and long-term business planning to adapt to the conditions ahead.
One way for marina owners to prosper is to show their customers that they have their best interests at heart. For example, it is a good time to consider offering alternative marine products that are more cost-effective and which do just as good a job.
Given product shortfalls and order backlogs of up to six months, boat owners are more receptive than ever to innovative solutions. So, turn a negative into a positive and stay on side with your customers.
Save money with PropOne
To this end, a smart way to save is to consider more cost-effective foul release coating for the underwater running gear of all boats.
PropOne is a non-toxic foul release coating that prevents sea life from adhering to propellers and underwater running gear, ensuring better performance, improved speed and lower fuel consumption. The product is used on thousands of boats worldwide yearly and has a proven track record for use by professional applicators and boat owners.
They have discovered that it delivers the same outcomes as other products in the market, but at a better price.
Letting boat owners in on this secret will endear you to them - and provide sales and business momentum at a time when every competitive advantage is so crucial.
Help boat owners combat product shortfalls and price pressures with the proven PropOne solution. Contact us here for a wholesale price list.