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Eurocool © RACA Journal | Benjamin Brits
Stock can be collected , or delivery arranged , reducing the amount of office and storage space of the contractor or client .
natural refrigerants , and this is something local wholesalers will keep their eye on ,” says Singh .
“ We monitor our normal stock holding , using various forecasting tools available . We also look at the element of seasonality that ' s involved in wholesaling . Our industry has always been busier in summer than in winter according to our statistics . Further , we also need to watch for trends in the market where ,
for example there has been significant growth in recent years in the CO2 industry that requires sourcing and research around CO₂ related components that then in turn need to be on the shelves . A lot of information and newer technologies comes back to the local environment from participation at international exhibitions , thus following the trends in the global market too ,” adds Taylor .
Pricing factors today have also been heavily affected by major increases in shipping costs that is purely related to supply
With national footprints , wholesalers not only play a critical role in storage of products , in the overall distribution of products in a country too . and demand . There is not only a huge shortage of shipping containers themselves but space on vessels due to the changed landscape of the sea freight industry routing and simultaneous global demand of commodities , particularly to China . This has resulted in almost a tripling of the cost of shipping .
“ One of the key factors that has always influenced pricing in our industry , irrespective of conditions , is the exchange rate and this is a significant driving force because 90 % of what we sell is imported and so has a direct impact on pricing locally . We are constantly keeping in contact with the suppliers to ensure that we are sourcing value products , so the best product for the price ,” notes Taylor .
These factors have a direct impact onto wholesalers because although there are volatile exchange rates and increased costs , maintaining a certain level of stock to support the industry is unavoidable and is still needed by the industry to continue to function , particularly where for example the food chain or medicine distribution remains an essential service . These factors lead to better ways or methods of getting products from A to B where packaging could be revised or where larger quantities of components are imported with potential local assembly , so there are also continual and smarter innovative ways to get around these challenges to manage costs transferred to the client at the end of the day .
“ Although these costs do get passed on , there is a point that is reached where we engage in negotiating with suppliers based on volumes versus cost-reduction to assist the local market . But generally , the market realises that when the exchange rate runs , prices are going to go up because everyone is in the same situation , so there is little ‘ resistance ’ to the fact , but when the exchange rate runs in the opposite direction , as a wholesaler you just have to ensure that you are not sitting with too much ‘ expensive stock ’. In the end , costs are generally balanced out ,” Taylor adds .
“ The pandemic has definitely not been favourable in terms of pricing because of the big impact on logistics as mentioned . Supply lead times have thus also been affected . The exchange rate is a factor and is often assumed the only driver of price , but this is a misconception . We must realise that we are not anywhere close to where we were a couple of years ago while factors that provide far more of a cost impact these days is the oil price and therefore the cost of logistics both on an international and local level . Global supply chain disruption also has a carryover effect such as what we saw recently with the blockage of the Suez Canal and hundreds of container ships being halted or re-routed ,” says Singh .
BUSINESS AND ECONOMIC RISKS Wholesalers have several business risks to start , from stock levels to the right product mix and credit facilities . With
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RACA Journal I August 2021 www . hvacronline . co . za