Finance Minister Ryan Straughn has warned businesses against price gouging as he outlined a series of measures to shield Barbadians from rising global shipping and fuel costs during his Budget presentation on Monday in the House of Assembly.
Straughn told Parliament that while the government would cushion the impact of international price shocks, businesses must avoid unjustified price increases that would further strain consumers.
“We can only urge the private sector to revisit this, along with their sourcing and pricing strategies as any attempt to price gouge in this environment will be self-defeating,” he said, referencing how the private sector partnered with the government to introduce a Social Compact in 2022.
A combination of global oil price volatility, shipping disruptions and new surcharges by international carriers could significantly increase the cost of imported goods, the minister.
Key warnings outlined by Straughn included:
- Shipping costs could surge dramatically if global oil prices rise.
- A container from China averaged just under US$4 000 last month, but that costs could skyrocket to as much as US$16 000 per container if oil reaches US$150 per barrel, he said.
Retail prices could increase sharply if these costs are passed through the supply chain. - Straughn said the knock-on effect in retail could exceed 25 per cent once duties and other charges are added.
Shipping lines have begun imposing new emergency fuel surcharges. - For a 20-foot container, the bunker surcharge will increase from US$200 to US$700.
For a 40-foot container, the surcharge will rise from US$400 to US$1 400.Several major international shipping companies have already announced surcharges in response to rising fuel prices and global supply disruptions.
- CMA CGM
- Mediterranean Shipping Company
- Hapag-Lloyd
- Maersk
Straughn explained that the bunker surcharge, also known as a bunker adjustment factor, is a floating fee added to freight rates to protect shipping lines from sudden increases in fuel costs.
“These shipping lines rely primarily on fuel for transiting their vessels across the world and have begun to take defensive action which will impact Barbados shortly,” he said.
To help contain the potential price surge, Straughn said government will introduce a temporary measure to limit the freight value used to calculate import taxes.
From April 1 to March 31, 2027:
- The value used for duty and VAT calculations on a 20-foot container will be capped at US$3 000.
• The value for a 40-foot container will be capped at US$6 000.
Straughn said the measure will ensure that taxes are calculated on the value of goods rather than inflated shipping costs.
The minister also announced that government will soon bring transfer pricing legislation to Parliament to regulate pricing behaviour among related companies involved in importing goods.
The legislation will allow authorities to review pricing structures where multiple related companies act as intermediaries in supply chains.
The government will also strengthen monitoring of essential goods by facilitating real-time access to prices for items within the national basket of consumer goods, Straughn said.
He stressed that while the government would do its best to cushion Barbadians from external shocks, consumers must understand the global pressures affecting supply chains.
“I have taken the time to outline these issues because while the government will do its best to shield the country from the full impact of these shocks, Barbadians should also have an appreciation for the full picture,” he said. (SZB)
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