Inflation is expected to see a new rise due to the problems caused by Houthi rebels’ actions in the Red Sea and the imposition of higher fees on ships carrying cargo containers forced to bypass the Suez Canal, incurring significant additional costs.
The Secretary-General of the Cyprus Chamber of Commerce and Industry (KEVE), Marios Tsiakkis, informed the Cyprus News Agency (CNA) that, due to the attacks by Houthi rebels, ships are avoiding routes through the Suez Canal and opting for a longer route towards the Strait of Bab el-Mandeb in Africa.
This alternative route takes about 20 days longer, escalating costs and, consequently, the fees that traders are obligated to pay.
Mr. Tsiakkis specified that there has already been an increase in fees for 20-ton (USD 500) and 40-ton (USD 1000) cargo containers. According to him, the fee amounts are expected to double after January 15, 2024.
With Israel’s intention to prolong the conflict, the prices of imported goods in the Cypriot market are expected to be affected, according to Mr. Tsiakkis. He noted that importers cannot absorb all the additional costs, so consumers will bear the burden.
Moreover, he added that another factor that could raise prices is the delay resulting from the longer shipping routes. Importers may need to place larger orders, requiring loans, and the repayment of these loans could also impact the selling prices of products.
Asked whether KEVE has received expressions of concern from merchants and business owners, Mr. Tsiakkis mentioned that some have already contacted the Chamber of Commerce.
He emphasized that businesses engaged in the trade of products arriving in Cyprus from the Middle East, such as cars, raw materials, electronics, electrical items, toys, and clothing, are primarily affected.
When questioned about the possibility of approaching the government for measures to mitigate the problem, Mr. Tsiakkis responded that such a scenario is unlikely.
He referred to the pandemic situation when there was a more severe impediment to the supply chain, but there was no room for state subsidies in that sector.