Few words about price increase

Price increase persists despite MSF Supply progression: What’s happening?

Two years into the pandemic, the global supply chain continues to be volatile. Each day comes news of choked ports, unavailability of shipping containers, record freight rates, and other problems that cause disruptions. On top of it, the overall costs are still rising sharply worldwide and this turmoil is accentuated by the recent war in Ukraine. Needless to mention that the world is being impacted by increasing oil prices at different levels.

At MSF Supply we are certainly suffering the impacts and we face constant challenges to supply and transport to our missions.

Our modal transport is mostly by air (70%), followed by sea (20%) and by road (10%).

1) Impacts on transport

Apart from the pandemic and the war, the closure of the Shenzhen port, and others, the Suez Canal accident and shipping route congestion is worsening the situation.

Some of the consequences are the congestion of the ports and long delays to get a container. Besides, the overall increase in container prices between 2021 and August 2022 reached more than 14%.

Apart from it, frequently there is not enough space in the ships to accommodate the containers.

Sea transport brings consequences in other transport modalities. Due to the lack of containers in the market, the demand for air transport is increasing. This market suffered financial losses during the pandemic and they're now trying to recover their oxygen by increasing the costs of transport.

This current context has a severe impact on the missions, which are confronted by unusual delays.

2) Impacts on products

Many main commodities used for the manufacturing of our products or their packaging (plastics, metal, paper, various food commodities, etc.) are facing significant price increases when compared to 2021.

There was an approximate increase of 6,76% (flat, no weighted by purchase amount) in our goods and it's not uncommon that prices double or even triple.

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Comparison between purchasing price in our data base between May 2021 and August 2022

The spike in energy costs, labor costs driven by inflation, and financial costs are further impacting the production costs of our suppliers.

In 2021 the three ESCs joined efforts to work on the annual Request For Quotation. This was a strategic action to increase negotiation leverage and to protect missions from an abusive price increase.

MSF Supply also invested in further solutions to tackle the challenges, such as new procurement strategies, diversification of our suppliers, and new manners to optimize the supply flow.

Despite all this endeavor, the current situation pushes the suppliers to pass the costs to clients. It became so critical for the market to the point where even where price agreements are in place, the providers aren't able to respect our conditions.

3) What's next and how you can help

In this hostile environment, our main priority remains to ensure continuity of supply to our Missions.

We’re continuously putting efforts to guarantee fair rates to protect us from price peaks, push our suppliers to engage with our supply conditions, and to look for alternative solutions with MSF partners (International Office, Med team, Pharma team, Log team, etc).

We also need missions’ collaboration to strengthen our market position. You can do it by preparing your forecast and to provide the standard list.

Forecasts and standard list increase the chances to reduce risks of stock rupture, to assure better prices and to speed up the deliveries.

Let’s keep working together in time on all of these challenges and take the opportunity to build a more humane, efficient and sustainable supply chain.

MSF Supply