The Government is yet to respond to proposals to assist manufacturers and exporters in reducing rising shipping costs, which is threatening the viability of their businesses. Since the onset of the novel coronavirus pandemic, shipping costs have been rising due to challenges in the global supply chain.

Freight charges per container has moved from US$2,000 last year to as high as US$20,000 at present. Large stakeholder groups such as the Jamaica Manufacturers and Exporters Association (JMEA), Private Sector Organisation of Jamaica (PSOJ), Jamaica Chamber of Commerce (JCC), MSME Alliance and the Customs Brokers and Freight Forwarders Association of Jamaica have lobbied for Government intervention, as they seek to address the issue, which is becoming a sore point for businesses. The organisations recently wrote two separate letters to Finance Minister Dr Nigel Clarke seeking help in addressing the impact of the rising shipping costs on their businesses and outlined proposals, which they believe would provide a limited amount of relief.

No response to pleas for help from Government

The JMEA says the finance minister is yet to respond to their proposals and pleas. Speaking at last Wednesday’s Jamaica Observer Business Forum, the JMEA President John Mahfood said no word has been received as yet from the finance minister or the Government for help and their proposal to obtain a reduction in import and customs duties.

The JMEA, in its letter to Dr Clarke, which was also signed by the PSOJ, JCC and the MSME Alliance, recommended that he temporarily authorises the Jamaica Customs Agency to calculate freight rates on the pre-pandemic shipping costs of late 2019. The lobby groups are of the view that this measure will help to mitigate the impact of rising costs on manufacturers, traders and the citizens in general.

Meeting with Minister Shaw

Mahfood who made the point his association has not heard from Dr Clarke, put the case before Minister of Industry, Investment and Commerce Audley Shaw during a meeting yesterday. During the meeting, Mahfood reported that Minister Shaw was sympathetic to the plight being experienced by his members declaring his ignorance that the situation was so grim. The JMEA President said that Minister Shaw promised to raise the issue with his colleague Minister in the hope of getting some action for manufacturers with regards to customs duties and taxes to be rolled back to pre-COVID levels.

The JMEA president painted a grim picture of the adverse impact the escalating shipping costs is having on local manufacturers and exporters, who have seen freight costs jumped from US$2,000 to upwards of US$20,000. He drew reference to his own company, Jamaican Teas, which used to pay US$2,000 per container to ship to the region but when the cost moved to US$3,000 per container, he decided not to ship waiting on the cost to decline first.

Shipping cost kept on rising

“Then it went to US$4,000 and I said hold on it must come down now and then it went up to US$5,000 and after a while I said to myself hold on this doesn’t make sense, so I said all right just ship it at any cost. Today a 20-ft container costs US$20,000 gone from US$2,000 to US$20, 000,” Mahfood lamented.

He argued that it is unfair to pay duties on this higher freight cost and is suggesting that the duties be rolled back to pre-COVID levels to offer some relief given that it is unlikely that shipping costs will be going down anytime soon. According to Mahfood, the global supply chain challenges is causing manufacturers in particular to be running out of stocks, carrying higher inventory to prevent stocks running dry, which is resulting in increased operational costs.