The Barbados Chamber of Commerce and Industry (BCCI) is calling for the faster rollout of a new cargo clearance system, warning that delays at the Bridgetown Port are forcing businesses to absorb as much as $19 million annually in associated shipping costs that ultimately drive up the cost of living.
Chairman of the BCCI Customs and Trade Facilitation Committee, Lalu Vaswani, said prolonged congestion and inefficiencies in cargo clearance continue to create serious cost pressures for businesses, with demurrage charges alone draining millions of dollars in foreign exchange annually.
He was speaking during a press conference at the BCCI headquarters on Thursday, where he cautioned that unless decisive action is taken, these costs would continue to be passed through the supply chain to consumers.
Vaswani said the Chamber is now pressing government to move swiftly towards full implementation of pre-clearance of cargo, supported by firm timelines.
“We are getting to the point where we want to, through facilitation of the government, get to the point of agreeing on a pre-clearance of cargo implementation date to get everybody on board.”
“The prime minister is very intolerant of delays that are not justifiable and so we support her on that and we thank her for her support,” Vaswani said.
He said the Chamber’s immediate objective is to secure universal participation in the new system and establish measurable targets to demonstrate cost savings.
“Our last recommendation, which was submitted for discussion, is we want a commitment from each and every, not 99 per cent, [but] 100 per cent of the players commit that they are on board,” Vaswani said.
“Once we commit the starting date, our next goal is that for the next 12 months we would like 50 per cent of cargo under pre-clearance so that we can measure the benefit that we are achieving.”
Vaswani said further system upgrades are planned, including the introduction of an electronic single window to streamline approvals across agencies.
“There will be something called an electronic single window where in one portal all the agencies you need to engage, you can engage and get your clearances…” he said.
Vaswani explained that many of the challenges stem from an ageing port infrastructure that was never designed to handle current trade volumes.
He detailed how congestion directly translates into higher charges for importers and distributors.
“If you don’t clear your containers, there is a cost of storage from the port. If you clear your containers and it takes you too long, there is a charge from the shipping line which is called demurrage. Demurrage is a penalty that they impose from the shipping line,” Vaswani explained.
“You rented my container for x days, you have kept it longer. All these are additional costs which a business has to bear.”
According to Vaswani, those additional costs are not absorbed indefinitely by businesses but are passed on to consumers, intensifying inflationary pressures already facing households.
He said this reality prompted the BCCI to work closely with public sector agencies to fundamentally redesign Barbados’ trade facilitation framework.
Vaswani said the scale of the financial leakage has underscored the urgency of reform.
“Because that same demurrage charge that I told you about, the last figure that we have, the last annualised figure was $19 million in foreign exchange which goes out to pay for this additional cost,” he said.
He identified pre-clearance of cargo as the most critical solution to reducing delays and exposure to demurrage.
“We had to find a way. The solution that came up between the BCCI and the Customs Department is to promote preclearance of cargo; because of the procedures and the laws, cargo coming in has to be declared in advance of arrival.”
“If you can get your information in advance and have the procedures in place that you can process your customs documentation prior to the arrival of the vessel, then you have 24 or 48 hours to clear it instead of five days,” he noted.
While inspections and compliance checks would still be required, he said earlier processing would significantly reduce penalties.
“So then you are not coming into the web of demurrage, which is ten days. But it’s not as simple as that. There is inspection of cargo and this type of thing and that may take time,” he said.
He acknowledged that not all cost pressures are within Barbados’ control, pointing to volatile international shipping rates over the past two years.
However, Vaswani said government intervention had helped ease the burden.
“Sometimes you have costs that you have no control over. There have been a lot of shipping problems overseas for the last two years and sometimes the cost of freight has gone up from maybe $4 000 to $20 000 from the far east,” Vaswani said.
“The government took on board and capped the freight to where it would have been two years ago so that you don’t pay duty.”
(SZB)
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