April 20, 2012
Top supermarket executives have banded together to deliver one clear message - new tariff increases at Arawak Cay will mean higher prices on food for consumers.
Rupert Roberts, the owner of Super Value, said the situation "is nothing complicated".
"When we pay less for merchandise, we sell for less. When we pay more, prices are going to rise," he added.
The supermarket chief is predicting a rise of approximately three percent due to the new tariff structure at the $83 million Nassau Container Port (NCP).
Gavin Watchorn, the CEO of AML Foods Limited, provided a more modest estimate of one percent to two percent.
Either way, the retail industry is bracing for higher prices.
"In this industry you deal with low profit margins," Watchorn told Guardian Business. "That is significant for us. When you operate on tight margins, any movement of one or two percent can have a significant impact on the bottom line."
The response comes after Michael Maura Jr., the CEO of APD Limited, cleared the air on the port's stance concerning the new tariff structure. This week, all shipping operations are now handled out of the NCP, with Tropical Shipping and Atlantic Caribbean Line (ACL) shifting operations from downtown to Arawak Cay.
Maura provided a historic perspective on the cost increases, noting that carrier rates plummeted with the introduction of Mediterranean Shipping Company (MSC) six years ago and the subsequent onset of the recession.
"Even with the impact of NCP costs on carriers, the market is still paying much less than it was paying six years ago with freight," Maura argued.
He also pointed out that the 21st century port efficiently centralizes all shipping operations, which will no doubt result in long-term benefits for all stakeholders.
Roberts agreed with Maura, saying in 10 years costs might actually "average out and we may be better off". He believes that the benefit remains to be seen.
As for the present, Watchorn said the new tariff structure was unfortunately coming at a time when other costs, such as utilities, are at an all-time high.
If competition and the financial climate caused carrier rates to drop, Watchorn told Guardian Business that didn't come as an advantage to retail food stores. He noted the consumer benefited "because we are operating in such a competitive environment".
"All of those costs were passed on to the consumer. Now they will have to pay them back," he added.
This week, Maura conceded that each carrier has a unique port and cost structure, making it difficult to quantify the exact cost and benefit for each stakeholder. But at the end of the day, he remained confident that the net impact on cost will be "negligible", if anything at all.
The CEO said these fees are nothing new, and in exchange, the country now has access to an efficient and modern port.
"It is worthwhile to note that while the port costs have varied depending on where the carrier has historically operated, each carrier has, in fact, incurred port charges all along. The introduction of BCP fees are not in addition to historic fees but in place of."
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