How the CrowdStrike outage that crippled businesses worldwide could deliver another cost-of-living blow to prices

There are fears that Friday’s global tech crisis will push up the prices of everyday goods, only deepening Australia’s cost of living crisis.

Sanjoy Paul, associate professor of Operations and Supply Chain Management at UTS, and Towfique Rahman, lecturer in Business Strategy and Innovation at Griffith University, warn of aftershocks across the supply chain as a result of the Microsoft systems outage.

“Transport systems in particular were hit hard,” the two academics wrote in The conversation.

The academics warned that the global computer outage could impact shipping networks, air freight services and transport logistics, potentially causing delays or disruptions.

‘Both shipping companies and ports reported disruptions due to the outage,’ the organization said.

‘Delivery company Parcelhero has warned that there could also be significant consequences for air freight.

‘Other air cargo experts say it could take days or even weeks for full recovery to take place.’

Even before security firm CrowdStrike’s bad software update crippled computer systems worldwide, global supply chains were already under strain, one of the biggest factors contributing to inflation.

Australia relies heavily on shipping and air freight for common goods, which was hit hard by the Crowdstrike outage on Friday

The CrowdStrike bug caused Microsoft systems to display the dreaded “blue screen” error for hours on Friday. Many large international companies are customers, including banks and freight companies

Supply chain issues have been a problem since border closures and lockdowns during the Covid pandemic paralyzed trade.

This was further exacerbated by the Russian invasion of Ukraine and, particularly in Australia, by tensions with China.

But because Australia is separated from much of the world by vast oceans, freight problems persist.

Shipping routes in the Red Sea have been disrupted by Houthi rebel attacks, forcing ships to take a longer route around Africa’s Cape of Good Hope to reach Asian ports.

Paul Zali, executive director of the Freight and Trade Alliance, said some in the industry have called the latest supply chain woes a “baby COVID,” referring to rising freight costs during the pandemic.

“It will lead to higher costs and those will be passed on to the consumer,” he told Sky News last week.

‘From sweets to luxury items to medical goods, you name it, it’s all there.’

Drewry’s World Container Index, a composite of container prices, has more than doubled since early May, adding to renewed concerns about the impact of shipping on inflation.

Deputy Trade Minister Tim Ayres said: ‘Australia is at the end of the archipelago in Southeast Asia.’

‘We depend on trade with the world, and so this has implications for Australia.

‘Whether it’s congested container terminals in Singapore or Malaysia, or more broadly in the region, it has implications for our imports and for our exports to the rest of the world.’

Container ships like this one are finding the Red Sea dangerous due to the continued success of Yemen’s Houthi rebels using drones to attack transport ships

The Albanian government focused on inflationary pressures it could control, Senator Ayres said, including running budget surpluses and reducing the cost of living “without causing inflation.”

The monthly inflation figures fueled fears of another rate hike or, more likely, that rates would remain high for longer.

The Australian Bureau of Statistics recorded a higher-than-expected four percent increase in May, up from 3.6 percent in April.

Much depends on inflation in the second quarter ahead of the Reserve Bank of Australia’s next rate meeting in August, when interest rates could rise again.