Inflated cement prices triggered by freight charges
By Germain Sam
Inflation is here and the recent increase of the price of cement is a precursor of what is to follow.
A bag of cement use to cost VT980, now with the border closure it costs VT1,595, that’s a 62% increase on each bag.
The General Manager of Transam Vanuatu Shipping, Stephen Blade, explained that the shortage of goods and the increase of price is due to COVID-19.
The cancellation of flights put pressure on shipping routes. The shipping companies increased the freight charges and overflows to inflated charged and imported goods.
The manager attributed two reason for the increase — the shipping cost and a decrease of production in China. The shipping cost is increasing due to delay from the suppliers in China.
When the ships arrived at China they have to wait until the suppliers of products load the ships and it could take two or three weeks. While in China, the shipping agency is responsible for electricity, water and wharf costs.
All the delay of shipping cost hits directly the price in Port Vila. The second reason is when the factories of cement and flour could not produce enough quantity of cement or flour due to lack of employees. The employees are exposed to COVID-19 and they can contract the virus easily.
When there is a case on the vessel, the ship must cease operation and get to quarantine. All the risk shipment companies took could affect a full chain of operation and lead to a shortage of goods.
SHEFA Cooperative Business officer, Nic Oli, held that business houses might take advantage of the pandemic situation to increase good price so they could make more income.
“Some of the shops in Port Vila, especially hardware technically control their stock by increasing the good prices in order to maintain their stock until the arrival of the new stock,” he said.
According to the Transam GM, one cannot blame the shipping companies, the factories, the middle men and the government, they just doing their best ways to make sure every people in the chain of production is served.
It is a global issue and it affects every country, not only Vanuatu.
Lucien Nirambath, a senior compliance officer and economist at the Prime Minister’s Office explained the market law. “When the demand is high and the offer is low, the price increases,” he said.
The inflation affects all the economic levels and what could be frightening is when it hits food prices. The local supply of food is not enough to meet the people’s primary needs and it is a very important issue to deal with before that happens.