Shipping Association says consumers will feel pinch of surging freight rates

Local consumers are being warned that supermarket prices can go even higher due to an increase in surging container freight rates.

President of the Shipping Association of Barbados Arlin Kellman informed members of the media that shipping freight from various destinations including China has risen, partly due to the recent blocking of the Suez Canal by a megaship for almost a week. This triggered a new surge in container spot freight rates.

His comments followed a press conference at the Barbados Defence Force (BDF) today where donations were made to the National Vaccination Fund.

Kellman said that while container rates have an impact on global trade, considering that the majority of manufactured goods, including clothes, medication and processed foods are shipped in containers, Barbadians can expect to feel the pinch of higher prices.

“There will be increases. In fact, I have seen some already. If you go to supermarkets, you can see that there have been increases in prices. So I suspect that it might go even higher and given what was said in the media recently by some retailers there will be increases to come,” Kellman said.

The president said that approximately 300 container vessels involved in the canal incident led to a shortage in containers. He further explained that about a year ago, shipping vessels were forced to use low sulfur fuel, resulting in some of them having to retrofit at a significant cost.

Kellman said: “So those factors also come into play as far as the freight rates are concerned. And then you have the accessorial charges by the various companies, the various ports that have increased as well. So it is expected that here we will have to pay more freight and if the consignees, the people who actually order the stuff and bring in the cargo into the island, stop taking the brunt of that cost, and pass it on, there will be an increase.

“There are no ifs or buts about it. Hopefully, the increases will not be substantial. But in recent times, the retailers and distributors have been trying to hold much of the strain as far as that cost is concerned, but you cannot hold it forever.”

Also speaking to the media following the press conference, Minister in the Ministry of Finance Ryan Straughn noted that global commodity prices continue to rise due to a significant fall-off in the supply of key items. Straughn said the Government has been monitoring the cost of items on the local market while continuing to work with stakeholders to mitigate against any future price hikes.

But, the minister said, the reality is that there is a need to fully reopen the economy to get people earning as they were before or even better, to be able to afford the prices on the market.

Straughn said: “Once the world economy settles down within the next 12 months or so, I think we will start to see a normalization of a number of key commodity prices as the supply comes back to normal. But in the short term, we have seen that disruption and we are monitoring it to make sure that any strategic intervention is made to either contain or mitigate the increases in costs.”

Straughn, who hinted that the increase in port costs could affect Barbados’ foreign exchange position based on the demands for goods and items, said the Government is focused on boosting its local agriculture production which is also experiencing challenges.

“We are still very healthy from a reserve position, in terms of what we have at the Central Bank. What we need however is for our tourism activity to restart so that we get the regular flow, whether it is taxi men or people on tours, the regular flow of foreign exchange and income needs to go back through the economy.

“So once we have reserves at the Central Bank that can pay for imports, the prolonged absence of a significant number of tourists on a daily, weekly and monthly basis could potentially pose a risk if this pandemic goes on for much longer and that is why the emphasis on vaccination is so important,” Straughn added. (anestahenry@barbadostoday.bb)