Export costs will 'soar' if war in Iraq breaks out
Export costs will 'soar' if war in Iraq breaks out
Rendi A. Witular, The Jakarta Post, Jakarta
The cost of shipping exports to the Middle East, Europe and
Africa will soar by at least 35 percent if a war against Iraq
comes to pass, according to an expert.
Indonesian Shipowners' Association (INSA) chairman Barens Th.
Saragih told The Jakarta Post on Thursday that the higher costs
would result from increased operating costs and war-risk
surcharges imposed by shipping companies.
"For the shipping charges alone, which now range between
US$1,100-1,200 per 20-foot container, the increase will be around
15 percent, while for the war-risk surcharge, shipping companies
will add about $50-150 per twenty-foot container," said Barens.
The increase in shipping costs was unavoidable as most ships
had to sail by longer routes to avoid passing the Suez Canal for
fear of being hit by stray missiles as the canal was located only
about 650 kilometers from Iraq.
Thus, cargo ships would have to sail past South Africa en
route for Europe, which would take much longer.
Meanwhile, shipping companies would impose various surcharges
if the U.S. attacked Iraq. The war-risk surcharge for shipments
to Egypt and Israel would be $50 per 20-foot container and $100
per 40-foot container, $24 and $48 respectively per 20 and 40-
footer for Syria and Lebanon, $40 and $80 respectively per 20 and
40-footer for Algeria, $75 and $150 respectively per 20 and 40-
footer for Libya, and $125 and $250 respectively per 20 and 40-
footer for Europe.
The higher shipping costs would adversely impact on the
country's already fragile export industry.
Local businessmen have said the looming U.S.-Iraq war has
already dealt a blow to the country's exports, causing worries
that Indonesia will not be able to reach its export growth target
this year.
Many buyers in Europe, Africa and the Middle East have started
canceling orders for the country's prime manufacturing
commodities, such as textiles and footwear.
Europe, the Middle East and Africa together contribute to
around 50 percent of the country's total exports, which last year
reached $57 billion.
On average, Indonesia's exports each year to Europe are worth
more than $8.5 billion, the Middle East about $11 billion and
Africa about $1 billion.