Freight ‘high’

The National Main Stories

By LUKE KAMA
Freight charged by local shipping services is more than two times higher than charges by international shipping, according to the Independent Consumer and Competition Commission.
Chief Commissioner Paulus Ain told The National yesterday that there were only four coastal shipping firms in the country. They are Kamgang Holdings Limited, PNG Mainport Liner Services Limited which was amalgamated as a subsidiary of Steamships in August 2009, Steamships Trading Company Limited, and Consort Express Lines Limited of which Steamships is a major shareholder.
It acquired a 17.6 per cent share of Kambang in Consort through its subsidiary Mainport in August 2009.
“We obviously hear people say the cost of doing business in PNG is high. And one of the main drivers of the costs of doing business everywhere around the world is the movement of cargo between ports – either international ports or domestic ports,” Ain said.
He said the international movement of cargo was cheap compared to the domestic costs.
For example, when cargo from overseas lands in Port Moresby or Lae ports to be shipped to other parts of the country, the cost is doubled or more.
“For you to ship a 20-foot container from overseas to PNG, you pay around K3000. But to freight that same 20-foot container from Lae to Port Moresby or vice versa, you will have to pay around K6000,” Ain said.
He said as a result, the wholesaler who picked up the cargo would have to recover those costs and had to put up a huge cost-recovery margin.
“Wholesalers then pass on the costs to retailers. Retailers will have to do their mark-up again. So when it’s on the shelf, it’s the consumers who are paying for the entire costs of the supply chain,” he said.
Ain said it was one of the reasons the costs of goods and services in the country were high and the commission was looking into addressing the issue so that freight costs were charged appropriately.
One of the major shipping companies contacted yesterday told The National that they would provide a response to Ain’s comments today.