The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

Bahamian consumers and businesses were yesterday warned that local goods prices will be unable to escape the fall-out from a 40 per cent increase in shipping costs over the the past three months.

Michael Hall, managing director of Bahamas Maritime Logistics Service (BMLS), told Tribune Business that while shipping and logistics is “doing much better than it was” in COVID-19's immediate aftermath it is facing new cost pressures due to a combination of firming oil (fuel) prices and rising global demand.

"There is a lot of demand now, and I think the issue is now the security of goods reaching its destination within a proper amount of time. So what would take a month will now take two months, and also the shipping costs increased as well due to the demand after COVID," he added.

"A lot of the fuel costs have gone up, and this has been seen with a lot of terminals around the world. Getting containers by ship, by train or by airplane, everything has gone up at least by 40 percent."

Despite the rising in shipping costs, the post-COVID supply chain bottleneck between China and the US has eased as more containers are placed into circulation. This has improved the flow of physical goods trade across the Pacific between the two major economic powers.

“That’s being smoothed out," Mr Hall added. "The reason is that a lot of these containers are reaching their destination and, of course, as truckers get them to their destination those containers are obviously being freed up.... To keep up with the demand for containers, they've been building those containers on a regular basis. So it’s smoothing out.

"Supply and demand is not going to just allow bottlenecks at any particular port where it’s happening. Because right after COVID things started opening up. You saw the bottleneck happen in places like California and New York, and different places. You have places like China and France building new containers, building new ships in order to reach and answer to the demand of the suppliers.”

However, Mr Hall said new cost cost pressures have emerged to impact the shipping industry, which he described as "just the way of logistics now. There has been a lot of new costs that have gone in locally.

“I’m not even looking at it globally, but the global enforcement of these new costs has a big effect on the local," he added. "For instance, containers and concrete and anything we import is going to be more. The actual cost of the shipping container used to be $3,000 from Europe. It has now increased to $8,000.”

The bulk of these cost increases are concentrated in “Bunker C and fuel costs", while food prices and other supplies will face added pressures from the high demand generated by a strong tourism season. “All of those things are going to increase because the amount of tourism is increasing. So obviously that’s automatic, and as long as those demands are high, the imports are going to be high,” Mr Hall said.

Explaining the Bahamian market for the next six months, Mr Hall added: “It’s going to be tough because with a looming depression coming on and inflation costs, and because we’re right next to the US, obviously The Bahamas will share in those burdens. As their costs go up our costs will definitely go up.

“That will be seen. Everyone can see. That has been proven. Yes, we are building more ports, but all of our normal costs are going up from fuel costs to the cost of food on the shelves. All locals can see these costs. It’s going to be an interesting next six months even rolling into the next year. I think it’s important that we strap down and try to be prepared for the impact of high fuel prices and also the high import costs.”