Freight charges rise up to fivefold, adding to import costs: Businesses

Freight charges from some international ports supplying goods to the Maldives have increased by between two and five times, adding to import costs and commodity prices, business representatives have said.

The issue was discussed on Monday night during the "Both Sides of the Economy" programme organised by the Ministry of Economic Development and Trade and broadcast on PSM.

Amir Mansoor, Chairman of State Trading Organisation (STO) and Managing Director of Lily International, said increases in the cost of importing goods were among the factors contributing to higher prices in the Maldives.

"I also agree that prices are going up. But on no platform does anyone mention the reason for it," Amir said.

According to Amir, freight costs have increased on routes used by Maldivian importers, including shipments from the United Arab Emirates and China.

"We import goods most frequently from the UAE and China. Even when importing from these two countries, our freight charges from certain ports have now risen two, three, four, or even five times compared to previous rates. All of these figures factor directly into the final price," he said.

Amir said freight rates from ports in the UAE had increased fivefold.

He also cited the cost of transporting frozen goods from China. According to Amir, shipments that previously cost about USD 4,000 in freight charges now cost between USD 8,000 and USD 9,000.

Longer transit times are also adding to costs, he said.

"Another component is that goods that used to arrive here within a month now take two months, and sometimes even three. This is due to ongoing conflicts, combined with rising fuel prices. This also creates a significant shift in pricing," Amir said.

STO Managing Director Ibrahim Shimad also said changes in international shipping and supply chains were affecting the cost of bringing goods into the Maldives.

Shimad noted that STO subsidiary Maldives State Shipping (MSS) operates a shipping route between Colombo and Malé. He said increases in freight charges and longer transit times across supply chains were contributing to the cost of imports.

The cost of importing fuel has also increased, according to Shimad.

He said conflict in the Middle East has resulted in oil tankers travelling into some areas being required to purchase war risk insurance.

The insurance requirement creates an additional expense for fuel shipments, he said.

"That policy is sold for a minimum duration of one week. But because transactions are conducted with Oman, a full week is not needed. Yet, insurance for that entire duration must still be purchased," Shimad said.

The comments come amid concern over increases in the prices of food and other imported goods in the Maldives.

Businesses participating in Monday's discussion said freight charges, longer shipping times, fuel costs and insurance expenses are among the external costs that are reflected in prices paid by consumers.