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Canada’s Supply Chain Issues Prolong Due to the New Delta Variant

Canada’s Supply Chain Issues Prolong Due to the New Delta Variant

Written by

Samuel Kanda

Samuel Kanda
Industry Research Analyst Published 22 Sep 2021 Read time: 3

Published on

22 Sep 2021

Read time

3 minutes

Despite setting strict social guidelines and a comprehensive economic response plan, Canada is still enduring many challenges due to COVID-19 (coronavirus) pandemic. Although Canada's recovery is still on track, the Delta variant continues challenging businesses with supply shortages.

Since almost every industry has been affected by the coronavirus pandemic, this article will highlight five industries affected by the Delta variant. The Delta variant has negatively affected various supply chains, resulting in volatile purchasing and shipping costs.

Highlighted Industries:

Car and Automobile Manufacturing industry in Canada

The Car and Automobile Manufacturing industry in Canada has endured a period of massive declines, with industry revenue expected to contract an annualized 15.4% to $10.7 billion over the five years to 2021. The pandemic is largely to blame for the decline in revenue, causing factories to close and demand for new cars to dwindle. Since trade is an integral part of this industry, any material or part delays will likely constrict operators from completing the final product and selling it to the end consumer.

Toy, Doll and Game Manufacturing in Canada

The Toy, Doll and Game Manufacturing industry in Canada has experienced a massive decline, with revenue falling at an annualized rate of 10.5% to $273.1 million over the five years to 2021. The industry's reliance on imports, which account for 97.3% of domestic demand in 2021, is likely the main culprit for the decline. This reliance on imports has hindered operators' ability to keep up with demand since many Chinese factories closed to help mitigate the spread of coronavirus.

Frozen Food Production in Canada 

Most issues hindering the Canadian Frozen Food Production industry are due to increased raw material prices for containers to pack the final product. Most companies import packaging containers or raw materials from nations that can use less expensive labour. As a result, increased aluminum and crude oil prices have caused operators' purchase costs to grow, causing industry profit to decrease.

Semiconductor and Other Electronic Component Manufacturing in Canada

The Semiconductor and Other Electronic Component Manufacturing industry in Canada has endured many challenges as a result of the pandemic, such as factory closures, soaring commodity prices, rising shipping costs and increasing demand. These factors have all contributed to operators' supply shortages amid rising costs and demand.

Athletic and Sports Goods Manufacturing industry in Canada

Due to increased leisure time as people spend more time at home, the Canadian Athletic and Sports Goods Manufacturing industry has endured growing demand for its products. However, operators in this industry have struggled to keep up with the rising cost of plastic and a shortage of many different parts. Despite these struggles, revenue is expected to increase an annualized 1.3% to $1.6 billion over the five years to 2021.

Overall, rising input and shipping costs have forced many manufacturers to raise prices to remain profitable. These rising product prices have also been one of the main contributors to Canada's rising inflation rate, which has jumped 4.1% in August 2021. Although shipping costs are expected to stabilize slightly, they are still likely to remain much higher than prepandemic levels.

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