There is major concern that new restrictions on vessels and related increased charges by shippers at the water-scarce Panama Canal could ripple into increased costs for Barbados’ importers and higher prices for consumers.
Minister of Energy, Business Development and Commerce Kerrie Symmonds, and Barbados Chamber of Commerce and Industry (BCCI) president Paul Inniss, said while it was still was too early to state definitely what the impact would be, fallout was anticipated, including some potential delays around Christmas.
Meanwhile, Barbados Consumer Empowerment Network executive chairman Maureen Holder is urging businesses to exercise restraint and transparency on prices, stressing that consumers “cannot be the shock absorber for every international disruption”.
They were all reacting to developments at the Panama Canal where, having previously introduced restrictions, authorities there announced a reduction in ship slots effective September 3 and September 15 in response to reduced rainfall in the canal watershed, and an expected reduced precipitation for the rest of the rainy season. Shipping lines have responded by introducing Panama Canal-related surcharges.
Symmonds told a Nation team that cargo vessel restrictions at the canal “have a serious knock-on effect for the international trade in goods . . . because ships will either carry less cargo, so as to pass through more shallow water in the canal, or alternatively wait longer, or worse yet, reroute themselves”.
“Each of these options is harmful to our interest because they all are more expensive and inconvenient for our consumers. The Panama Canal is a critical global waterway, which connects Asia, the place from which we get a vast amount of our imports, to the Americas and the Caribbean,” the Senior Minister noted.
“Our challenge is that any restrictions on the use of the canal impact insurance cost, freighting cost and fuel operating cost. Therefore, because we continue to be so import-dependent, these higher prices can lead to pain in the pockets of consumers who are seeking to purchase construction material, vehicles, machinery, medical supplies and foodstuff.”
Inniss said the BCCI was monitoring developments at the Panama Canal closely. He said the key concern for Barbados was the restrictions were emerging when some importers were already facing higher freight costs, tight vessel capacity and longer shipping lead times.
“Panama therefore adds another layer of cost and uncertainty to an already pressured freight environment. The impact will not be uniform across all imports. It will depend on where goods originate, the route used and the carrier,” he stated.
“Cargo moving from Asia into the Caribbean through the Panama Canal, including some building materials, industrial inputs and consumer merchandise, is more directly exposed than goods moving on routes that do not use the canal.”
The Chamber president explained that for affected importers, the issue was both cost and availability.
“Higher freight rates and additional surcharges increase landed costs, while reduced capacity and delays can make it harder to secure vessel space and receive goods when they are needed. Member feedback also indicates that importers are preparing for potentially significant delays as the Christmas import period approaches,” he said.
“Timing matters particularly for seasonal merchandise. If goods arrive several weeks late, the effect goes beyond freight cost and can affect product availability and business performance.
“Recent delays affecting some school uniform fabric in Barbados predate the current Panama restrictions and should not be attributed to the canal, but they illustrate the practical consequences that international shipping disruption can have locally.”
However, Inniss said no one should assume that every importer will experience the same increase or that every consumer price will rise as a result.
“Freight varies by origin, route, carrier and contract, and it is only one component of the final cost of putting goods on the shelves in Barbados. Much will therefore depend on how long the canal restrictions last and whether they intensify through the year-end peak shipping period.”
Amid concerns about the possibility of higher prices for Barbadians, BCEN acknowledged the ongoing challenges at the Panama Canal and additional shipping line surcharges, but Holder said her organisation did not accept “the automatic assumption that every additional shipping cost must immediately be passed on to consumers”.
“There is a crucial distinction between a cost that has actually been incurred and one that a business anticipates may incur,” she stated.
“BCEN previously expressed concern about prices being increased in anticipation of higher costs. This concern is particularly relevant now. If goods have already been purchased and landed in Barbados before a new shipping surcharge takes effect, the subsequent surcharge does not change the cost of that existing inventory.
“Where businesses genuinely incur additional freight costs, BCEN accepts that they may need to adjust prices. However, those increases should be reasonable, proportionate and related to the actual additional cost incurred.”
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