Dominica's Private Sector Tackles the Global Shipping Crisis
Dominica's private sector is taking decisive action to mitigate the impact of the increased cost of global shipping due to the COVID-19 pandemic.
A number of recommendations and solutions to the exorbitant spike in shipping costs came from the first-ever Taking Care of Business Show hosted by the Dominica Association of Industry and Commerce (DAIC).
The show featured international trade expert Andrew Satney, general manager of Do It Centre, Evadney Esprit, and also manager of Vee Shipping, Vernesta Newton, and broker of A.C Shillingford and Company Ltd., Javeed Joseph.
The short-term and long-term recommendations proposed by the panelists centered around policy changes to import duty, smarter shopping by businesses and consumers, and enhanced communication among businesses to their consumers.
Executive Director of the DAIC, Lira Fabien, told The Sun that to date only one other country in the region has taken steps to alleviate the plight of increased shipping fees on its private sector.
Guyana has indicated it would apply the pre-pandemic rates to the shipping which means businesses get to save and they get to pass on those savings to the consumer so both the business and consumer benefit. According to information from the DAIC, local businesses have experienced an upsurge in the prices of goods of up to 300 percent. The freight had also increased significantly, with an average price of a 40-foot container from China jumping from EC$4,000 to over EC$20,000.
Because of this increase, there has been reduced purchasing power of businesses and consumers alike. A glaring reality of the domino effect of the global shipping issues.
Fabien says there has been a notable decline in consumer purchasing which has led the various institutions to rethink how they do businesses.
"The disposable income of individuals has decreased because costs are increasing and people are not getting more money," she explained. "For some of the items, businesses have noted that there's been a decline in consumer purchases. Hence, businesses have to be smart about what they import so that it would be something that consumers actually want."
The local private sector confirmed it had already begun taking steps to remedy the ongoing shipping crisis. For example, businesses have increased their container load shipment and advanced orders to ensure a regular supply of products based on the needs of their customers. Businesses have also sought to maintain prices, or reduce the rate of increase, cognizant of the fact that consumer income has remained flat.
Local manufacturers have often made the argument that they can help reduce the country's import bill if they would get more local support. Nevertheless, Fabien points out that may not necessarily be so at this time. "There possibly could be an opportunity for this demand to be filled locally. However, the businesses still have their raw material to purchase and in some cases they import. Manufacturing costs are quite expensive in Dominica, so these are costs that manufacturers would present to their consumers," Fabien said.
Currently, some businesses have confirmed their absorption of the increase in prices, for the time being, to reduce the burden on consumers.
Regardless of this move, the executive director says the sustainability of this method is unknown.
"Businesses may be able to absorb for some time. But based on the increase in cost they would not be able to absorb all of the cost for every item. But if the cost of importing continues to increase that will mean businesses, in some cases, will not be able to absorb and the prices will continue to increase."
Fabien vowed the DAIC is committed to collaborating with critical stakeholders in the public and private sectors to ensure the implementation of these solutions. The expectation is for the increased purchasing power of consumers, sustainability of the business sector, and enhancement of Dominica's economic development during this tumultuous period.