Escalating freight charges pose fresh challenge for exporters

Exporters are looking for a reimbursement of at least 40 percent of what is currently paid as freight charges

• Current scenario highlighted as “serious disincentive”
• Those able to pay a premium have access to space
•  Exporters to seek redress from govt. by way of reimbursement

 By Shabiya Ali Ahlam
Sri Lanka’s struggling export sector is faced with an emerging challenge with freight charges reaching a new high, trimming the much-required foreign exchange fetched during the ongoing global health crisis.

The National Chamber of Exporters (NCE), voicing concerns of its members shared that the escalating charges in freight is a hurdle the community is grappling with in addition to carrying out operations in the new operative environment that has called for re-designing in work infrastructure.

Speaking to Mirror Business, NCE Chief Executive Officer (CEO) Shiham Marikar said the increase in air freight charges is constraining the industry from capturing opportunities. 

“It’s a serious disincentive. Exporters do not have a choice of alternative. All the carriers have limited space and equipment shortages. Those who are able to pay premium rates are able to get the required space,” shared Marikar while highlighting the plight of exporters.

While the hike is prevalent for certain routes, air freight charges to Maldives have doubled from what it was during pre-Covid. Likewise, the Middle East routes have increased by over 150 percent. 

Freight charges to USA and Canada increased approximately from US$ 300 to US$ 1,800, and Latin America from US$ 1,250 to US$ 1,500. Europe and the Far East follow suit.

Marikar stressed that all sectors are impacted on account of reduced scheduled passenger flights and the increase in freight charges adds to the growing woes.

However, a similar situation prevails in sea cargo as well with charges in sea freights having witnessed an increase of about 80 to 100 percent from what it was before the pandemic crippled economies across the world. 

According to feedback from the NCE member base, the lack of space in ships has dealt a heavy blow on the industry. 

In an effort to receive some relief during the ongoing turbulent period, exporters have urged the NCE to seek redress from the government on their behalf.

Exporters are looking for a reimbursement of at least 40 percent of what is currently paid as freight charges, or the difference in charges paid between now and what was paid three months ago.

The top five export destination for Sri Lanka for the January – September 2020 period are; USA (US$ 1,892 mn), UK (US$ 664 mn) India (US$ 453 mn), Germany (US$ 430 mn) and Italy (US$ 330 mn). The five destinations absorbed over 50 percent of the country’s exports.