Shippers club worries retailers
George Town dock, Grand Cayman
(CNS Business): Cayman’s local shipping lines appear to have joined the Caribbean Shipowners Association (CSA), which local retailers fear will lead to future price hikes that will have to be passed on to customers. Some local merchants and wholesalers have raised concerns that with Hybur, Seaboard Marine and Tropical Shipping all joining the association and with no anti-trust laws in Cayman, they will be able to set rates that will hold importers to ransom, especially with peak seasonal hikes. Traders are now being told by the local shipping lines and their agents that they must now direct their shipping needs to a central person in Miami.
In an email sent to a number of local major importers, Joe Espinosa, the Miami-based CSA Executive Director, circulated a new service contract proposal from the Cayman Islands member carriers of the Caribbean Shipowners Association.
“As you will note, the members participating in this service contract will abide by the same rates, terms and conditions with regard to the aforementioned commodity, which will result in a higher level of service for the Cayman Islands trade,†Espinosa wrote. “We trust that this proposed service contract meets all of your requirements,†he added in the mail that informed the customers that the shipping lines were now all under one umbrella association.
Local traders told CNS that they have no idea what the improved service will be but they are very concerned about the potential future price increases. Merchants said that “the ultimate effect of this collusion between the carriers†will lead to increased prices on goods at the point of sale, as they described the association as a cartel. “Any increase in rates will be felt immediately as all costing calculations include the freight rate of the day,†one local merchant added.
There are particular fears that the decision by local agents to come together to set prices will not only eliminate competition and generally lead to higher rates but the seasonal peak hikes will cause real hardship for shoppers. The CSO has already adopted a voluntary guideline calling for the implementation of a 2014 peak season surcharges until 3 January next year for the wider Caribbean region.
A release from the association revealed that $175 per TEU is now being applied without exception on southbound cargo to CSO Caribbean basin service destinations.
“This surcharge will enable carriers to recover the higher costs caused by increased volumes, including equipment positioning, labour overtime, port congestion, cruise liners and extra loaders,†the association release stated. Members of the CSO implementing this surcharge included Tropical Shipping.
CNS contacted the local shipping lines as well as the CSO Executive Director about the association and what it will mean for the local retail industry, fees, prices and ultimately the customer at the point of sale, but has so far received no response about the decision by the shipping lines servicing Cayman.
Wayne Panton, the financial services minister who is responsible for commerce, told CNS that he had very recently been made aware of the issue. However, Panton stated that he was travelling back to Cayman Thursday from Europe and would be looking into the issue on his return. “It is something I am concerned about,†he stated in an email.
The Cayman Islands Chamber of Commerce stated that so far it has received no representations regarding the issue.
Category: Local Business, Retail
@ fishman
The days of local Cayman companies owning ships going between here and the USA are long gone. The regulatory hurdles along and costs assoicated have made sure of this. I have spoken with many merchants locally and they say the costs are the problem. In reality the ship agents in Cayman are the former ship owners.
“Higher costs caused by increased volumes” to justify a seasonal increase? If that argument is applied then the less freight carried the lower the costs; so sail each ship with only one container aboard: and see how long you stay in business!
Panwix, Mr Panton certainly has the responsibility to protect the interests of Caymanians ,even if that includes certain restrictions on shipping Companies doing business here.We need to remember that there was a time when Cayman merchants actually owned and operated the ships that brought cargo here.Perhaps this need to happen again.
Well if the rates go up maybe its time to look elsewhere. Panama anyone? We know its a good solution it will cut prices for customers and merchants. Why haven’t we look and try to negotiate?
Shipping rates with the Liners are so slow I have never seen a time in 30 years were they have been this low. I find it very concerning that Mr. Panton feels he has the ability and hubrus to try and interfer in Private companies and how they assoicate themselves.