While many companies have added surcharges to their invoices, it does not begin to cover added expenses
As gasoline prices jump even higher at the pumps, the pain is being felt beyond those filling up for their commute to the office or to run errands.
With gas increasing 2.4 cents per litre to an average of $1.71.1 in Calgary on Friday, according to GasBuddy, the price to refuel is up 16.4 cents a litre over the last month and 7.5 cents in the last week.
Independent Calgary grocer Freestone Produce has seen its shipping costs double over the last year alone. Part of this was driven by the pandemic and supply chain issues earlier in the year, but now it is fuel that is driving up the cost of doing business.
“Through the whole pandemic, we’ve lowered our profit margin significantly to make sure consumers get products for the right price,” said Ali Soufan, Freestone Produce manager.
The higher shipping cost means the price of apples has spiked 25 per cent to $1.25 per pound, which adds up on a shipment. Apples are mainly sourced from B.C. and the further they have to go to bring in produce, the higher the shipping rates soar.
One positive is the growing season is beginning in Alberta and there will soon be more produce available in our own backyard, which will help manage costs.
For Jennifer Singer, a partner in Ron Singer Truck Lines, the increase in the cost of diesel is just the latest in a long line of challenges to the sector, going back a decade.
She pointed to insurance going up eight per cent and tires up 40 per cent in the last 12 months, while ordering parts is a growing issue.
While many companies have added surcharges to their invoices, it does not begin to cover added expenses. She said there is an also an issue of companies and drivers undercutting each other on prices, taking losses just to get the business.
This is weakening the industry as a whole.
“It’s knocking all of the people out of the industry,” said Singer. “All of the old-timers in the city of Calgary aren’t around anymore because of this — the rate cutting, the costs and not being covered for your costs.”
The rising cost of transportation has impacted local brewers at just about every step of the process, but it is just one of many increases they are also battling.
Blair Berdusco, executive director for the Alberta Small Brewers Association, said costs have jumped for everything from boxes to labels to brewing. Overall, in the last year, inputs have increased 15 and 30 per cent.
Still, she noted, those costs have been largely consumed by the craft breweries in an effort to stay competitive and affordable. For the newcomers to the sector, it’s easier said than done, and it is likely only a matter of time before the cost of a six-pack will also increase further.
“I think it’s a fair assumption that at some point there is a tilt that will force the hand of any business,” said Berdusco. “We’re optimistic it won’t happen but you can only go so far until you’re forced to make that decision.”
Still, Berdusco said she expects the sector to continue to grow, even after doubling the number of manufacturer licences handed out since 2018.
For those looking forward to beach-filled vacations or visiting family on the other side of the country, now may be a good time to book a flight.
Calgary-based airline WestJet group has not yet introduced a fuel surcharge on its tickets, but it is monitoring conditions.
“At this time, we have not increased fares, nor have we made any deliberate change to our systems in response to the rising cost of fuel,” said Madison Kruger, a media relations adviser for WestJet. “Our inventories are automated to adjust based on demand and prices can increase due to demand for flights being higher than the supply.”