Hong Kong's major retailers are using direct sourcing and economies of scale to avoid price hikes amid surging logistics costs from the Middle East war. Sa Sa International chairman Simon Kwok Siu-ming warns of pressure on petroleum-derived beauty products. Shipping and airfreight costs have risen 10 to 15 per cent.
Hong Kong’s major retailers, including the operator of Wellcome, Mannings, 7-Eleven and Ikea from DFI Retail Group, are using aggressive tactics such as direct sourcing and leveraging massive economies of scale to avoid raising prices despite surging logistics costs arising from the war in the Middle East.
Their resilience is being tested for certain goods, with a leading cosmetics chain warning that shipping and airfreight costs have already surged by up to 15 per cent.
Sa Sa International Holdings chairman Simon Kwok Siu-ming told the South China Morning Post on Friday that some beauty items were petroleum by-products, facing further pressure for price increases if the situation worsened and affected fuel supplies. “Fuel and transport-related costs have indeed risen, with shipping and airfreight fees already increasing by about 10 to 15 per cent,” Kwok said.
“Although the group’s products have not experienced shortages or any obvious delays, the unstable situation makes delivery timelines more difficult to control,” he said. “We are closely monitoring developments to manage our inventory in a more prudent and flexible manner to minimise the impact.”
The warnings follow weeks of geopolitical turmoil triggered by the start of the US-Israeli war on Iran in late February.