Amidst rising shipping costs due to the tensions in the Red Sea, the Jordanian government is mulling setting price ceilings on essential commodities while traders are calling for customs and tax exemptions to tide over the current challenges.
At a recent meeting with a Lower House committee, Minister of Industry, Trade and Supply Youssef Al-Shamali said that container shipping prices from China and East Asia have increased from 160 percent to 200 percent after tensions are rising in the Red Sea. “The situation in the Bab al-Mandab Strait will have an impact on the rise in container shipping prices, prompting the government to take similar measures to those taken during the COVID-19 pandemic by setting price ceilings for containers carrying essential goods,” he said as reported by the state-run Al Mamlaka TV. Jordan is largely reliant on imports across a range of industry sectors due to its limited natural resources. Over the past two months, a sudden surge in Houthi attacks in the Bab al-Mandab Strait connecting the Red Sea and the Arabian Sea prompted global shipping carriers to halt transit through the Suez Canal for several weeks.
Many companies diverted ships far to the south around the Cape of Good Hope, driving up transportation costs. The situation further escalated on Jan. 12 as the United States and Britain launched strikes on Yemen. Fadi Saleem, an importer of grains and canned food, said there had already been an increase in commodity prices prior to the conflict due to rising inflation. The recent escalation did not only lead to a rise in shipping costs but also insurance costs. “We urge the government to provide exemptions to the traders, so we can reduce our losses especially if ceilings are set for prices,” he told Xinhua. Ameer Jamal, staff at a clearance company, said marine shipping to the Middle East has been facing mounting challenges after the Red Sea disruptions.
“Ahead of Ramadan, which this year falls in early March, Jordan’s imports increase sharply and our imports from China and East Asia are huge in terms of basic commodities and other goods. Setting a ceiling for prices is a good measure to protect citizens from possible increases in prices,” Jamal said. “But providing tax or customs exemptions would be also needed to minimize the losses for merchants and the economy as a whole.” According to the authorities responsible for the management of the Aqaba Special Economic Zone in Jordan’s only port city Aqaba, there have been no cancellations in arrivals by vessels importing goods to Jordan so far.