Consumers brace for higher prices as freight cost surges
Tuesday, July 13th, 2021 00:00 | 2 mins read
Reuben Mwambingu @reubenmwambingu
The skyrocketing cost of freights has caused panic in the supply chain, leaving importers in a dilemma and pointing to higher prices for goods and services soon.
With a surge in importation cost, shipping sources say consumers will be left to bear the brunt of the escalating costs, as middlemen pass the extra cost to them.
They estimate the cost of importation has roughly doubled from last year due to rising fuel costs, tighter vessel supply and longer port turnaround times amid Coronavirus knocks.
An importer, Mary Nyawira who deals in second-hand clothes based at Nairobi’s Gikomba Market said the cost of bales has doubled, making her cut orders.
“I am tempted to increase the cost to cushion my business from the high cost of freight,” she told Business Hub.
This as importers blame the current situation on poor management and planning by shipping agents across the world.
Car Importers Association of Kenya (CIAK) chairman Peter Otieno said businesses also face problem of few containers and vessels as shipping agents have failed to execute their responsibilities effectively.
He explained that the solution lies in ensuring that all containers which are idle in various port areas and all ports are repatriated.
“For instance in China the international container manager must ensure that all the containers lying idle in different ports are repatriated for reloading with cargo...
You will find that empty container depots are flooded with containers,” said Otieno who is an experienced container manager, having worked in various ports in Africa.
He said shipping agents are supposed to give a daily stock and advise their principals on every data about number of containers.
“Shipping agents are supposed to have their data at their fingertips. They are supposed to give a daily stock and advise their principals on the number of containers that have been cleared, how many have applied, approved and presented their shipping orders, “ he explained.
Shippers who spoke to the Business Hub said although buyers have enjoyed low freight prices for years they don’t see immediate end to current high freight costs.
The rising cost of freights, they added, is akin to Covid-19, where after the pandemic hit the East forcing Europe to shift the business to America.
Early last year, when the Covid-19 pandemic began to spread, for instance, many countries began implementing national lockdowns.
Shipping companies began reducing the number of cargo ships that were being sent out. This not only stopped the usual flow of imported and exported goods, but also saw empty containers not being collected.
The most significant example of this, experts say can be seen in the American regions, where Asian containers could not be sent back due to Covid-19 restrictions.
“When the pandemic happened, the East, where usually a lot of supply to Europe is sourced from, was hit hard.
After it was placed under lockdown it created shortage of supply,” explained Shippers Council of East Africa CEO Gilbert Langat.