Businesses warn of layoffs and price hikes on account of Customs dispute
Barbadians have been put on notice that price increases and layoffs in some sectors are looming as a result of the damaging work-to-rule by Customs officers at the Bridgetown Port Inc.
The action, related to Customs officers’ dissatisfaction with plans for their integration into the new Barbados Revenue Authority (BRA), has resulted in long delays in the clearing and inspection of containers at the Port.
Officials of some popular supermarket chains, manufacturing plants and distribution agencies told Barbados TODAY that the situation had resulted in an increase in operating costs and, in some cases, spoilage of products.
Additionally, companies have racked up hundreds of thousands of dollars in extra storage and demurrage charges because of the Customs officers’ action.
A “very concerned” owner of A1 Supermarkets, Andrew Bynoe, said while he was able to absorb the extra storage costs in the initial phase that was no longer the case. In fact, Bynoe said any further delays that had a cost attachment “will have to be passed on”.
“In the cases of refrigerated containers, it costs us extra to have that container plugged in at the Port. These charges are compounding and therefore whereas before we have been absorbing, the time has come when we will have to pass these charges to the consumers. One of the direct results will be an increase in the cost of food,” said Bynoe.
He could not say how soon prices could increase.
However, he told Barbados TODAY he was forced to throw away some perishable food items because of the extra time it took to get a container opened and cleared.
“We have had food spoiled, which we have had to throw away. So it is a great inconvenience and great cost. We have thrown away [items] out of one container so far, and it cost us an extra $5, 000,” he complained.
Bynoe said while he did not want to consider layoffs at this time “certainly, if the matter is not resolved in a reasonable time”, then it would have to be considered. He acknowledged there would be “a ripple effect” on the island.
The Chief Executive Officer of Caribbean LED, Jim Reid, said his manufacturing plant has also been suffering as a result of the recent delays, pointing out that the company’s ability to export to its over 14 markets was at risk.
“It has impacted production and we had to contemplate laying off workers. Fortunately, we have not had to do that yet. If this go-slow or work-to-rule continues, that is a real possibility,” said Reid.
“It also impacts on our ability to meet export orders, which brings in foreign exchange to the company. So it is really starting to hurt us quite badly . . . It is a real serious issue. Members of the public are not feeling the pain right now but will soon feel the pain and it is really disheartening,” he said.
Reid said products, which usually take an average of two days to clear, were now taking up to two weeks to be cleared.
“There are thousands of people’s jobs being affected here. This is a serious issue. Our economy is not doing great. This is the worst possible time and the worst possible thing to do to our economy . . . they can’t continue this way,” pleaded Reid.
Also echoing similar sentiments was Managing Director of Massy Distribution Glenn Taylor, who stated that the slow-down was definitely impacting that arm of the Massy Group’s business negatively.
He explained that in some instances, the protest action had resulted in the company running out of stock of some supplies, which is resulting in loss of sales. He explained that where it used to take as little as two to three days to clear a container, it was now taking between seven to ten days.
Taylor opted not to disclose how much money the company had lost already or how many containers were being held up. He said while the company had not had to discard any food items yet, the quality of a lot of products, including produce and dairy, had been compromised resulting in shorter time on the shelves.
“It will result in increased prices unless we are able to lobby with the Port and the shipping lines to extend or to waive their charges,” he said. “We are trying to engage the Port to see if they would be lenient in terms of the surcharges because of the length of time [the containers have] been in the Port. We are also trying to engage the shipping lines to see if they would extend the number of free days allowed for demurrage. So we are trying to negotiate with them, plus we have the plug charges every day if you bring in refrigerated containers,” said Taylor.
He said the situation called for all parties involved to quickly come to a decision. “It is really going to hold the country to ransom. All of us are consumers. The same persons that are engaged in this go-slow, they will go into the supermarkets and won’t see products or they will notice the prices of products [have] gone up and they will be the same ones to complain. They will have to realize that this is being initiated at their level,” said Taylor.
Sales and marketing manager at Armstrong Agencies, Andy Armstrong, told Barbados TODAY the situation had resulted in a shortage of items at his distribution firm.
“We ran out of a number of items over various periods. For [the month of] May alone, we probably lost about $150, 000 in sales because we didn’t have some items available,” said Armstrong.
Armstrong said that while the Port has been accommodating in reducing and, in some cases, waiving some of the fees, it was still costing extra. “And to some degree, the shipping lines are giving some ease in demurrage but we still end up paying more than we usually pay,” he added.
“At the end of the day, the Barbados Revenue Authority is going to be unhappy because I imagine most companies will make a smaller profit this year than they did last year, so they will be collecting less income tax from us,” Armstrong predicted.
He said he had about eight containers on his premises to be opened but he was told the soonest he could get an appointment was next week Thursday.
“We have about 12 containers in the port which should have come out by now, but everything there is a big backlog and bottleneck. I get the impression overall that the backlog is getting worse by the week,” he lamented.
And with the busy Christmas period quickly approaching, Armstrong said: “If they don’t start bringing down the backlog, we are never going to catch up. That is the fear I have”.
The businessmen, who spoke with Barbados TODAY, agreed that all the parties involved in the dispute had “very strong cases”, but they recommended that there be “a cooling out period” where staff go back to work as normal while allowing the union representatives, the Government and the BRA to reach a suitable decision.