According to statistics from the Independent Consumer and Competition Commission (ICCC), international shipping rates for containerised and general cargo have risen dramatically since 2020. This has had a noticeable effect on the price of domestic products.
The sharp rise in prices for maritime freight was primarily caused by the Covid pandemic and trade imbalances. This consequently resulted in international container shortages.
Paulus Ain, the commissioner and CEO of the ICCC, noted that rates fell briefly between September and December 2021. However, from March 2022, they rose again as a result of the current global situation.
Ain said, “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.”
He added that low-income island countries like Papua New Guinea are particularly susceptible to higher inflation due to a significant reliance on imports. So, when shipping costs, fuel rates – especially bunker prices – and international food prices increase, inflation results.
Mr Ain also said another underlying cause pushing up international transport costs for containerised and general cargo is fluctuations in foreign currency rates.
He said, “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.”
Image credit PNG Ports
