Consumers should not expect a guaranteed reduction in the price of goods in the shops, despite the cut in the cost of container-related port charges, President of the Barbados Chamber of Commerce and Industry (BCCI) James Clarke has warned.
He said the level of savings to the consumers – if any – would depend on a variety of factors, including world oil prices, over which domestic distributors and retailers have no control.
“It’s not an automatic guarantee because there are so many things that go into it right…with what’s happening in the Middle East, the Suez Canal and the Panama Canal…and all these things, and all of a sudden, the costs go up. The shipping lines have increased their costs. In fact, some of the costs for a 40-foot container have now gone back to a COVID level…and that is significant,” Clarke told Barbados TODAY in an interview.
“So, you know, a 40-foot container out of the Far East may have cost you US$6 000 [BDS$12 000], that now costs you US$12 000 [BDS$24 000] to bring here. That’s another $12 000. So, if you save $100 at the port, or $200 at the port, it’s not going to have a significant impact on the costs. In fact, you will see a price increase, because the cost from the shipping line far exceeds what the cost is in the port.”
But Clarke was adamant that every effort should be made to drive down the costs of these elements as much as possible.
He said: “Though the FAS [Free Alongside Ship] charges were just over $1 100 for a 20-foot container and about $2 500 for a 40-foot, obviously depending on the value of the goods within that container, the saving in the port could be a lot or it could be a very little on that shipment….
“But, certainly, all along the supply chain the costs go on for a myriad of reasons, so the examination of the supply chain and where those costs go on and what they are, and if anything can be done to reduce them is certainly a very worthwhile exercise, not just from the chamber’s point of view, or the port or even government, but it’s in everybody’s interest.”
In a national address last month, Prime Minister Mia Mottley told Barbadians to expect a 17.5 per cent decrease in container fees charged by the Bridgetown Port. She vowed at the start of the year that the government would monitor the market for the change.
Then on Monday, Chief Executive Officer of the Barbados Port Inc. David Jean-Marie announced that effective the first of this month, port charges were slashed by 7.5 per cent, following on the heels of a 10 per cent decrease in April last year.
He said the move is in keeping with the Mottley administration’s efforts to lower the cost of living. The CEO said the overall 17.5 per cent reduction in the cost of imports at the port follows the port’s takeover of stevedoring operations and the elimination of associated costs.
This month’s drop in charges means that it’s now costing importers $1 377 to clear a dry 20-foot container through the port and $1 434 for a refrigerated one, while exporters are paying $583 to ship a loaded container from Barbados.
When compared to what it cost since April, the present savings on the 20-foot dry container are $111; $117 for the refrigerated one; and $47 once the container is loaded for shipment.
Clarke gave the assurance to consumers that the cost of goods will fall once businesses are able to hold their margins in a way that keeps them in business.
“If you make a saving in the port, you know you have a certain margin that enables you to stay in business, any reduction in the port, means that when you put on your multiplier, the cost comes out as less,” he said.
In the meantime, the BCCI is working with the government to identify the sources of the added costs and their impact, according to Clarke.
“Any reduction in those charges along the way should translate into a reduced cost on the shelves in Barbados once the margins are held the same,” he stressed.
Last month saw a moderate increase in crude oil prices, the first monthly rise since the last quarter of last year, amid concerns about global oil shipments owing to heightened tensions in the Middle East and the Russia-Ukraine war.
But analysts expect prices to continue to rise in the short term, stabilise or even slightly decline amid increasing global oil inventories and a potential economic slowdown in China.
emmanueljoseph@barbadostoday.bb
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