High international cargo shipping costs hindering competitiveness of businesses


High cost of shipping international cargo is hindering the competitiveness of African businesses on the global market scene, Benonita Bismarck, Chief Executive Officer of the Ghana Shippers’ Authority (GSA), has lamented.

“The multiplier effect is the consistent rise in the general prices of goods and services and its attendant adverse effects of stagnated economic growth,” she stated when she delivered the keynote address at the ongoing meeting of the Union of African Shippers’ Councils (UASC) Committee of Experts on Transport Costs in Accra.

To successfully overcome these challenges and ensure trade harmonising and growth of the sector under the African Continental Free Trade Area (AFCFTA), Ms. Bismarck called for strategic measures to explore ways to reduce the cost of transportation of “our international cargo and improve our competitiveness for the benefit of both shippers and our people”.

The AfCFTA is projected to increase intra-African trade demand by 28 percent, with demand for almost 2 million trucks, 100,000 rail wagons, 250 aircraft and more than 100 vessels by 2030, according to a report by the World Economic Forum: AfCFTA: A New Era for Global Business and Investment in Africa.

Head of Research, Monitoring and Evaluation at the GSA, Emmanuel Arku, added that high transportation cost has been a bane to Africa’s international merchandise trade, both within and with other continents. He said there is abundant research to show that transport costs to and from Africa have always been far higher than the global average.

“It has also been observed that freight rates between African countries are higher than freight rates from Africa to other continents. This is mainly attributed to the fact that most cargoes to and from Africa have to be transhipped through other continents, especially Europe,” he stated.

shipping international cargo

Three years since the world was hit with the COVID-19 pandemic, the global economy and international maritime transport are still recovering from its devastating impact, with freight rates going through the roof.

To resolve this disturbing development, the UASC Committee of Experts on Transport Costs was inaugurated in Abuja, Nigeria in October 2021, with the principal objective to address the seemingly intractable problem of high transportation cost of international cargo confronting the sub-region.

Commenting on the development during the meeting, Assistant Director of Trade Services, Nigerian Shippers Council Abayome Adewuyi said the UASC Committee of Experts on Transport Costs would not continue to watch while foreign shipping companies exploit the sub-region with higher freights and surcharges.

“We should thoroughly interrogate the reason why the transportation cost component of commodities in the sub-region is more than 35 percent, whereas it is less than 10 percent in other developing economies and less than 5 percent in the developed economies. We must all be very open and free to present the positions confronting our various countries and also provide all the measures that have been put in place to address this ugly trend that is injurious to our economy, leading to the high cost of doing business at our ports and limiting the growth of our indigenous shipping companies,” he said.

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