Venezuela $l billion in debt for late shipping containers

Posted by PortVision

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Reuters reports that Venezuelan shipping freight rates are the highest in the region, sometimes more than three times other South American destinations. Much of these costs are due to unreturned containers. State agencies owe $1 billion in fines for late returns and storage costs for those containers.

The containers have, variously, been parked on farms, at plants, in empty lots, and along unpaved roads for months or even years in the main port city of Puerto Cabello. This growing disorder in the importing process is just one element in poor Venezuelan port logistics. In 2010, 1,0000 shipping containers holding powdered milk were found in a petrochemicals complex. Some containers spent as long as six years in the port and its surroundings before being returned. Although some of these containers have been returned, the fines have yet to be paid.

MarineLink.com estimates that rental for the thousands of containers (worth $20,000 to $40,000 each) is $100 per day per container.

Even though global shipping rates are falling, generally (due to lower fuel prices), in response to the growing risk of recovery and glacial queues at ports, shipping lines have increased rates for delivery to Venezuela.

There are a large number of industries that have been unable to collect on billions in unpaid bills from Venezuela which has a shaky-at-best economy. Triple-digit inflation, chronic product and raw materials shortages, and the plunge in the price of oil – an important aspect of the Venezuelan economy -- have dogged the economy under the current leadership. Inflation in 2015 was 180.9%. The IMF predicts 700% for 2016. EuroNews.com reports that a state of economic emergency was declared on May, 13, 2016.

Andrew van den Born of Willis Towers Watson, a risk advisory and insurance brokerage, states that “the Venezuelan shipping sector is in a state of crisis.” EuroNews.com describes it as an economic meltdown.

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Posted on Jun 28, 2016 6:07:00 AM

Topics: Container, Shipping