Photo credit: ICTSI South Pacific
Since 2020, international shipping rates for general and containerised cargos have climbed dramatically, having a considerable influence on domestic products pricing.
According to statistics accessible to the ICCC, the surge in maritime freight prices was caused by the COVID-19 epidemic and trade imbalances, which resulted in international container shortages.
According to Mr Ain, rates fell for a brief period between September and December 2021, but then rose again in March 2022 as a result of the current global economic shock.
“Given that PNG relies heavily on the imported food products and other basic essential items and necessities are mainly imported, when international freight charges increase, they also affect the domestic prices,” Mr Ain said.
He said that structural reasons such as low-income, land-locked, and island countries like PNG endure higher inflation as shipping costs, fuel prices (particularly bunker prices), and international food prices rise due to a significant reliance on imports.
Mr Ain said that variations in foreign currency rates, which affect import costs, are another underlying cause driving up international transportation costs for general and containerised cargo.
“The depreciation of the PNG against the currencies of major trading partners has sustained PNG’s inflation for some time now and the recent shock in global crude oil prices and increase in international costs of shipping and logistics have exacerbated the increase in domestic prices of many countries including PNG over the past two years,” he said.
Reference: Post-Courier (21 April 2022). “Cargo Shipping Costs To Increase”.
