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LETTERS: Inflation and shipping costs

Thursday 16 June 2022 | Written by Supplied | Published in Opinion


LETTERS: Inflation and shipping costs

Dear Editor, I read with interest the recent article in the CI News regarding inflation and the fact that inflation in the Cook Islands was only projected to go up to 5 per cent and then drop later in the year.

The same article put NZ’s inflation at 8 per cent and continuing to go straight up. I would think that if our inflation rate could be lower than that of NZ, we should consider ourselves to be very fortunate. If anything, our true inflation rate is higher than the NZ rate, not lower, and it will be unlikely to drop at all over this coming year.

A major cause of our inflation here is the high costs that we pay for sea freight. Almost everything that we need here in the Cook Islands (other than some foods) needs to be imported and this is just a fact that we must accept.

Also, the way that we are charged for sea freight is arbitrary and unjust when compared to other Pacific Island countries. For instance, a 20-foot container coming down from Asia to Suva costs a base rate price of US$2800. If the same container is shipped on to Apia for a further five day trip the cost now rises to $3800 which is fair enough. However, if the same container continues on for just a further three days from Apia to Rarotonga, we here are charged a whopping US$6600 and if the same container travels on the same ship for a further seven days to Nukualofa in Tonga, the cost of shipping drops back down to $3800. So clearly the costs of shipping bear little resemblance to the actual operating costs and we suffer from the arbitrary pricing.

When confronted shipping companies will always try and justify their high prices with excuses about increased operating costs which is correct, these costs have increased, but their increased costs is covered by customers several times over. This fact is borne out in the financial reports of these shipping companies which show record profits being made at the moment – some more than double the good trouble free pre-Covid days.

Last week President Biden tweeted “one of the reasons that prices have gone up is because a handful of companies that control the market have raised shipping costs by as much as 1000% … it’s outrageous”.

Shipping companies with a monopoly position like Matson have with us here in the Cook Islands have a moral obligation to price fairly or it can have a serious detrimental effect on our economies and result in sky rocketing prices.

Don Carlaw


Pacific Property Ltd