The war in the Middle East is causing significant disruptions to the economies of the region and beyond. It is affecting energy, trade, and finance, leading to higher fuel and input costs for large energy importers in Asia and Europe.
I do not claim to be a finacial export or even to have extensive knowledge in the world trade systems. What I have written is something that we are experiencing in our working life today.
Fuel prices have gone through the roof not just here in Turkey but all over the world. Our retialers have had not choice but to increase prices on the shop floor. Electric bills, delivery prices and anything related to energy.
Then we get the phone calls asking us to reduce prices, with our buyers asking for credit.
So, we attend meetings at our factories, discussing what we can do. The foam we use for the manufature of mattresses has gone up by 80% since the beginning of the war leading to an overal 30% rise in the price of the product. Long term orders are being cancelled putting our factores at risk of not surviving.
Then we have to think of our terracotta products which are baked in a oven in order to cure. These ovens are heated by gas which has gone up in price by over 300%. This has to be passed on to the customer who again is constanting searching for other options in countries where the wages are lower than Turkey and are able to be more competitive with their pricing.
We have been selling garden furniture for 6 years now but it seems we are constantly in a battle with China on prices. Just as things were beginning to bring things under control it all goes bang. Think of a factory with 75 welders, cutting and bending machines working all day. Electric prices have escalated which adds to the manufacturing costs. Again, cancelled orders as we can not compete.
Then there is shipping and transport. Local transport costs have risen considerably and with the price of a container. Customs agents service prices have gone up and the cost of actually shipping a container through any route to anywhere in the world, is changing on a daily basis. Compared to this time two years ago this has increased by average of 1000 USD.
Even the port of Triesta in Italy has been affected. A road freight route from Turkey to Holland that normally takes a week, this time our cargo has taken a full month due to the strikes in the Italian port, again due to the war in Iran.
Do we know how long this is going to continue? No-one can answer. It seems the leaders of the world have turned into war mongers without a thought for the consequences of the world economy. Then they do not need to worry about the cost of a loaf of bread. They are millionairs.