Shipping costs on the rise
The price of shipping has seen a significant increase over the past year and local importers are feeling the brunt of it. Consumers are also being affected by the increase in the price of goods.
The blocking of the Suez Canal by the huge container ship, Ever Given, for six days in March of this year saw detrimental effects for shipping. The canal serves as the quickest route for ships travelling out of Asia and the Middle East to the East Coast of the United States and Europe. The blockage resulted in the inability of over 300 ships to pass through the canal and consequently a backlog in shipping. With the canal blocked, some ships resorted to taking longer routes. Travelling by longer routes meant more fuel for the ships which would then be reflected in the price for shipping.
According to the 2021 Review of Maritime Transport by the United Nations Conference on Trade and Development (UNCTAD), “Towards the end of 2020 and into 2021, container shortages and congestion at ports, along with other disruption, led to record container freight rates, notably on the routes from China to Europe and the United States.” The Review went on to say that “Since late 2020, shipping costs have increased in part because of a shortage of containers. Containers are shipped full from export-oriented locations, notably in Asia, and many usually return empty. As Asia slowly began to recover, other countries remained under national lockdown and restriction so the importing countries could not return containers.”
The Jamaica Monitor spoke to the owner of Stone Designs and Marble Products. The business owner who ships goods mainly from Brazil and India has seen an increase in shipment prices from those countries. “We used to pay US$3,500 for a 20-foot container. Now it has gone up four times [that amount]. That’s the magnitude of the increase,” he said. Due to the massive price hike, the business owner says closing his establishment has been an option on the table. “We just can’t function. Everything is too expensive. The customers can’t pay, so we fail to become relevant “
Another local importer has also experienced similar trends in the increase of shipping costs. “Sometimes [shipping costs are] seven times the original price. On normal terms, a 40-foot container would be US$3,200 to ship out of China. Present day, its US$20,000,” the importer said. He said the price jump has seen a gradual increase of US$2000-$3000 on each shipment over the last year. The increase in the prices of his products have impacted sales with customers buying only what they need, he said.
He theorizes that shipping costs for goods coming out of China will be on the decrease after the end of the Chinese New Year in February.