PRICE increases are looking more inevitable than ever. According to the minister of Commerce, Prem Konjoo, ?food products, non-food products, but also raw materials will become more expensive because of the rise in freight charges.? The country may have to face major price increases in the next two years. As Mauritius Chamber of Commerce and Industry?s outgoing president, Anil Currimjee, pointed out, ?the worst is yet to come.?

Since 1st April, the price of goods from the Far East, South East Asia, Europe and South Africa has escalated. The tariff of a 20-foot container has gone from US$ 1200 to US$ 1600. The already high freight charge has gone up even more causing worries to shipping agents first and to all Mauritians in the long term.

The minister of Commerce does not think Mauritius has any say in the rise of shipping freight, which is regulated by the law of world supply and demand. Mauritius is very dependent on other countries for most commodities. As the country is a small island far from most centres, freight increase will greatly affect it.

The consequences on the prices of some imported commodities are already visible. The freight for flour has increased by 25%, for cement by 125% and for ration rice by 40%. And the increases were immediately passed on to the consumer. Former State Trading Corporation (STC) director Ravin Dajee seems quite pessimistic about oil prices. ?The invitation to tender is expected for May 2004 regarding oil products. Everything tends to show that there will be another rise in these products too.?

The international situation, especially with China emerging as a powerful state, has often been brought up to explain escalating freight. China?s imports have increased by 36%. It has become the main consumer of raw materials. For instance, it is importing more than 40% of the world?s coal, 25% of steel and 19% of aluminium thus mobilising a great number of ships as well as thousands of containers stuck in ports.

Rapid growth of shipping traffic

However, another reason for this rise in freight is the low productivity in some ports. Actually, shipping companies are really worried about the problems in Port-Louis. The biggest problem ships have to face is the waiting time in the port, with the ?first come, first served? system. They cannot afford to wait a long time as operation costs represent around US$ 25 000 per day.

According to Eric Mard, director of Maersk and president of the association of Mauritian shipping agents (APAMM), a system (berthing window) has to be implemented to keep ships informed of the day and time they will be brought alongside. As a result, their operation costs may go down and their productivity increase.

Actually, the shipping traffic is growing so rapidly that the port cannot cope with it. Port traffic growth has increased by 831%, which has inevitably led to a labour and equipment shortage. The Cargo Handling Corporation (CHC) has finally decided to invest Rs 330 million in new equipment to increase goods handling capacity and reduce the ships? call time in Mauritius. This could improve the situation.

But the mood is rather bad in the shipping sector. Many operators agree on the fact that the situation is not at all improving in the port. They depend on the prices that ship owners will fix according to the world economic situation. The latter will certainly consider China?s recovery, which is causing problems to our operators.

The freight increase is already a major problem. However, consumers do not really seem concerned or they may not be conscious of the price rises they will probably have to face in the coming months? The authorities should keep them better informed, all the more so as shipping freight is expected to rise again by 1st July.