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Dealing with Rising Costs in the Food Supply Chain Industry

Persistent inflation, tariffs, and ongoing geopolitical strife have added new pressure to the food supply chain industry, impacting the price of materials, and shifting consumer expectations. These circumstances have created a new realm of financial demands for food distributors and wholesalers. Here’s how to stay competitive, while keep control of costs.

The food supply chain industry plays a critical role in our economy by ensuring the safe and reliable delivery of products that keep people fed, while supporting millions of jobs. In today’s economic landscape, keeping operations efficient and profitable has never been more complex. From supply chain risk to stringent food safety requirements, managing costs continues to be an ongoing challenge for distributors, manufacturers, and wholesalers alike.

Causes of increasing operational costs

Food safety alone requires significant investments in specialized technology, equipment, and trained personnel. Meanwhile, global supply chain expansion, while offering more sourcing opportunities, introduces higher risk and more points of disruption. Natural disasters, geopolitical conflicts, economic shifts, and transportation volatility can all influence material availability and pricing. As manufacturers, distributors, and wholesalers strive to remain competitive, securing high-quality raw materials and delivering products efficiently becomes even more essential.

Recent policy shifts have only heightened these pressures. For example, the current U.S. tariff on steel and aluminum imports is 50% for most countries, a rate that has been in effect since June 2025.  Those tariffs, especially on steel and aluminum used in food packaging and distribution infrastructure, ripple through many supply chains.

According to the consulting firm Kearney’s Supply Chain Navigator report, global supply chain costs are projected to rise by up to 7% above base inflation by Q4 2025 (versus roughly 2% last year). This means that distributors face significantly steeper cost curves in the near term.

With volatility showing no signs of slowing, the question becomes: How can food processors mitigate rising costs and maintain profitability?

Smart investments that drive efficiency

When budgets tighten, strategic investments become more important than ever. Enhancing back-office systems and upgrading equipment allows companies to boost throughput, minimize waste, and improve cost-control processes. In food packaging and distribution – where speed, freshness, and precision matter – the right technology makes a measurable impact on margins.

Consumer expectations are also shifting. Shoppers increasingly want transparency into sourcing and added nutritional or functional value in the products they buy. Meeting this demand requires modern infrastructure capable of quality monitoring, traceability, and packaging adaptability.

How to upgrade when capital is tight

Many distributors and wholesalers know they need operational improvements, but the challenge lies in funding them. This is where the right banking partner can help.

Banks with strong equipment-financing capabilities and deep industry knowledge can structure solutions tailored to your growth plans.

Options may include:

• Equipment loans with fixed rates and predictable budgeting
• Equipment leasing for flexible access without long-term ownership
• Equipment Financing Agreements that transfer ownership at the end of the term

It’s important to evaluate the lifecycle of the equipment and how each purchase aligns with future strategy.

Other helpful tools include working lines of credit to support liquidity, purchasing cards to streamline vendor payments, and interest-rate hedging solutions that protect against further volatility.

In addition to these tools, distributors and wholesalers should also consider treasury management tools that optimize business operations. ACH origination services, merchant services, wires, and lockbox services will streamline payments and receivables, while ACH positive pay and payee positive pay will reduce risk exposure to fraud by allowing review of all transactions for fraudulent activity before they post. In today’s economic landscape where fraud is rampant, it’s necessary to employ fraud mitigation tools to keep accounts safe.

Likewise, it’s important to take advantage of depository solutions like commercial deposit accounts to manage funds and track growth. Each of these tools plays a critical role in helping companies optimize the financial backend of their work and the right bank will identify the appropriate tools for your business.

At Valley, we understand that no two businesses are the same, so we believe that their financial toolkits shouldn’t be either. A cookie-cutter approach doesn’t work, but a toolkit that’s curated specifically for your needs will. That’s the kind of white glove service you can and should expect from your banking partner.