Lasco Manufacturing is preparing for extended supply chain disruptions that are expected to persist well into 2025. Rising logistics costs, alongside global shipping delays, are putting pressure on the company’s operations. However, it remains unclear whether these challenges will force the company to increase prices for consumers, as the full financial impact has yet to be determined.

Chairman of the company James Rawle explained that Lasco Manufacturing has been forced to increase inventory in response to ongoing supply chain difficulties, which has resulted in higher expenses for securing additional warehouse space.

“We’ve had to rent more storage to manage the supply disruptions, but we’re still in the process of assessing the exact costs associated with these adjustments,” he told shareholders during the company’s annual general meeting last Friday.

It marks the second time in under six months that Rawle has raised concerns about the impact of supply chain issues on the company. However, the tone of these recent updates suggests a heightened sense of urgency compared to earlier this year.

One of the primary drivers of the increased costs is the ongoing bottleneck at the Panama Canal, where drought conditions have reduced the flow of larger shipping vessels. To maintain the movement of goods, companies are relying on smaller ships to complete the journey, which has significantly driven up shipping expenses. Additionally, geopolitical instability in the Middle East, particularly Houthi rebel attacks on vessels in the Red Sea, is further complicating global logistics.

“I’m not going to venture what the cost increase is because I don’t want to quote a figure that I don’t have on the top of my head, but it is resulting in increased costs,” Rawle previously explained, emphasising the company’s ongoing challenges. He also warned that “the turbulent times are still here,” referencing the global disruptions affecting logistics and raw materials.

Lasco has been proactive in expanding its supplier network, moving from two to four key suppliers in an effort to reduce the company’s vulnerability to these global challenges. However, the sourcing of specific raw materials — particularly micronutrients and vitamins — remains difficult, exacerbating the strain on operations.

“We see even some specific raw materials are giving us problems. What we call micronutrients and vitamins. It’s not easy to come by. And we have had to find ways, other sources,” Rawle said.

The situation is further complicated by the longshoreman strike in the United States, which could bring major ports to a standstill for weeks. Lasco’s shipping partners have already advised that the strike could cause months-long delays, adding yet another layer of uncertainty to the company’s logistics operations.

“…the knock-on effect could be substantial, delaying shipments by months,” Rawle said at the time.

US East Coast and Gulf Coast dockworkers began their first large-scale strike in nearly 50 years on Tuesday, halting the flow of about half the country’s ocean shipping, after negotiations for a new labour contract broke down over wages.

The strike blocks everything from food to automobile shipments across dozens of ports from Maine to Texas, in a disruption analysts warned will cost the economy billions of dollars a day, threaten jobs, and potentially stoke inflation.

To mitigate some of the rising logistics costs, Lasco is negotiating with customs authorities to streamline the clearance process for incoming shipments. The company is seeking more efficient ways to manage its supply chain, including the possibility of receiving containers directly at its premises to reduce handling and transportation costs. However, these negotiations are ongoing, and the company remains cautious in its outlook.

“We’re still navigating the details and trying to reach an agreement that benefits both parties,” Rawle said.

Despite the mounting challenges, Lasco Manufacturing said it is committed to finding solutions that will allow it to maintain its operations and keep costs in check. However, the company acknowledges that the path ahead remains uncertain.

For now, the company is focused on maintaining stability and minimising the impact on consumers, though the longer-term outlook remains fluid.