How does the shipping crisis impact the Cuban economy?
Since 2020, when the world was forced into confinement by the spread of HIV/AIDS, international trade began to suffer the consequences as the contraction in economies due to border closures was felt in maritime transport, which moves about 80% of the goods consumed on the planet, according to the United Nations Conference on Trade and Development.
The global supply chain is a fragile system consisting of numerous links that must function properly, but the pandemic has brought industries to a halt or severely reduced their efficiency, as well as imports and exports, and blocked international chains.
Container shipping, with its complexity and transcontinental nature, was particularly affected by port closures due to coronavirus outbreaks, port congestion, labor shortages and lack of new shipping containers.
These bottlenecks in the delivery of goods lead to rising inflation, which in turn is reflected in price increases for raw materials and components, ultimately impacting the end consumer.
Now, as some economic recovery begins to show thanks to governments’ handling of the virus and the advance of vaccination, the shipping system has struggled to satisfy consumers in dozens of countries, who are making increased purchases of goods.
A turning point has as its axis China, the main exporting power, from where the shortage of containers is most evident, and for this reason it is expected that between 35 and 45% of the reservations of goods in the world and in the different ports will be rejected, generating delays in their shipment, non-compliance of itineraries by the lines and difficulties to have new spaces in ships.
But associated with this there is another very worrying phenomenon: the costs of ship chartering have shot up alarmingly.
Thus, for example, the price of shipping a 40-foot container from China to Europe has increased so much that its effect has been felt in medium-sized companies and in more than a few sectors.
According to international experts and entities, freight rates for such means increased dramatically between July 2019 and January 2022. 2021 saw a particularly steep increase in September with the record price of more than US$10 800, while last month they stood at approximately US$9 800, still high.
“We are looking at a very complex situation that will lead to a reduction in imports especially if there is a dollar at very high levels,” experts have said.
But in troubled waters… In the midst of the “container crisis”, of the interruption of shipments, the profits of the big shipping companies, which impose the rules of the game, are enormous.
The impact on the Cuban economy
Consulted by the Cuban News Agency, Alejandro Gil Fernandez, Deputy Prime Minister and Minister of Economy and Planning, said that more than 6,000 containers with products destined to Cuba to supply stores in Cuban pesos and freely convertible currency are paralyzed in international ports because there are problems with the shipping companies and containers and freight costs have increased.
Last January 22, in an informative note on the irregularities that have existed with the stability of powdered milk for children and the distribution of coffee, the Food Industry Business Group pointed out that even though the national production of this last item of the regulated family basket has been fulfilled, “there is a level that is ensured with imported coffee that has not arrived in the country due to the existing difficulties with the shipping companies”.
As if that were not enough, let us recall that in an environment deeply permeated by the influence of the Cuban-American mafia, which advocates the strict application of the Helms-Burton Act, in April 2020 four shipping companies were sued in Miami for using Cuban port facilities nationalized after 1959.
They were Carnival, Royal Caribbean, Norwegian and MSC Cruises, sued by Havana Docks Corporation, which at that time appealed to the 11th Circuit Court of Appeals in Atlanta, Georgia, to consider an argument against the decision of a Florida judge.
These are some of the objective realities that daily hit the national economy and cannot be ignored as a consequence of the aforementioned crisis in maritime transportation, the impact of the U.S. blockade in the midst of the epidemic, persecutions and financial limitations.