‘Nail in the coffin’: New CCIWA survey shows Middle East fuel crunch casting long shadow over WA businesses

Initial price shocks from the Iran war have been so jarring that some WA businesses could be forced to close their doors, an “alarming” snap survey by the State’s commerce lobby has revealed. The first pulse-check of WA businesses since conflict erupted in the Middle East has shown how fast and far whipsawing fuel and freight prices are spreading through the economy, with one respondent telling the Chamber of Commerce and Industry WA: “This is probably the nail in the coffin for our business.” Survey results revealed 82 per cent of WA businesses have started to feel higher supplier costs, and almost half say they have been directly affected by difficulties getting fuel. Nearly one in three say the conflict has had a severe or significant impact on their business. To mitigate rising costs, almost of half of WA business say they’re trying to reduce “non-essential spending”, and one in four are reviewing their workforce. CCIWA sought the sentiment of more than 430 businesses from all corners of industry this week as prices for fuel — a non-negotiable input for the State’s most crucial sectors to operate — soared beyond expectations. More than half of businesses surveyed say they plan to try and absorb rising input costs, but the rest say they will have to pass the additional expenses to their customers. There are concerns this is only going to pile more pressure on WA consumers already fragile from a rate hike, and now having to factor higher fuel prices into their budgets and potentially cut elsewhere. NDIS-backed firm Dementia Foundation of WA is weighing up the economics of adding more electric vehicles to its fleet to make sure its 120 staff can continue to get from Northbridge to clients who live across metropolitan Perth. “In an unknown world, it’s a leading risk mitigation strategy that we have,” chair Brett Parker told The West Australian. “It’s not necessarily the high fuel prices causing us a lot of grief at the moment, but the one we are much more concerned about is the potential for rationing.” A reported backlog of thousands of ships in the Strait of Hormuz, essentially blocked under threat of attacks from Iran, has created huge disruption to global oil and gas flows. Australia has two oil refineries and is vulnerable as it relies on shipments from Asia, who are themselves relying on supplies stuck in the Middle East. “This reaches into virtually every business, whether it’s through fuel costs, supply challenges or the increased costs being passed on from suppliers,” new CCIWA chief executive Will Golsby said. “Our survey produced some very alarming results, with some businesses saying the current crisis could force them to close their doors.” Agriculture had been the hardest hit, according to the CCIWA survey, with 74 per cent reporting “severe” or “significant” impact from higher fuel, fertiliser, chemicals and freight costs. WA relied on imports of urea to the tune of 7.9 million tonnes of urea last year, and used about 8.7mt. “Businesses in the hospitality, tourism and retail sectors are likely to be the first to see these impacts and we’ve heard from businesses in tourism that they are bracing to experience impacts over the Easter holidays,” Mr Golsby said. One business told CCIWA that its freight costs had doubled, while another said they had stopped two operations due to lack of fuel access. “Our customers are cancelling because of price of fuel to get here,” another said.