KUWAIT: Recently, several companies and importers received an official document with new regulation from Department of Customs requiring all importers to load goods on pallets in a secure and accessible manner for inspection, avoiding any stacking that could hinder the process, outlining that non-compliance with these regulations can result in a fine of KD 400 and, in cases of repeated violations, the customs clearance license will be suspended and employees will be barred from customs activities.
Speaking with Kuwait Times, Ahmad Saad, one of the importers, said that the new regulations added new costs to his shipments. It was concise notice since they do not palletize any of the 80+ countries, including neighboring countries. "One of the suppliers answered when he was informed of the new regulation that my orders are based on ground loading; 2600 cases. This will be 24 pallets (100x120cm) of 70 boxes in a 40ft container. This means that a maximum of 1680 cases will fit in, which is a significant difference. The options were either to book a second container within 2 weeks, or they will have to dispose of the remaining cases at my expense since they do not have enough space in their warehouse,” he explained.
Saad revealed that suppliers inform importers that the cost of pallets or anything associated with the same will be on them, adding "On average, it will increase the cost of goods by around five percent, in addition to another 15 percent increase due to double container booking for the same quantity that used to fit in one container, making it a total 20 percent increase, which will eventually be handed over to the end consumers.”
Explaining that to load by pallet, there are additional costs of the pallet, forklift lift cost, fumigation, and operation which must be included separately from the goods price. In the long run, this will lead to having cheaper and less quality items replacing the better ones as businesses will require competing for their sustainability.
"Containers take about two to three months to arrive from the American continent. Even containers shipped from Turkey and Europe nowadays take about three months (instead of a month previously) as they need to go around the African continent to avoid being targeted by the Houthis. That is why the shipment costs have gone through the roof from being $1000 per container to around $6000 ,” Saad revealed, calling authorities to revise this rule for the sake of the consumers, and public, and as a measure to control the inflation.
Meanwhile, one of the importers, who preferred to remain anonymous, revealed that around 350 (not palletized) containers arrived in Kuwait. "Each container can fit around 20 pallets, which would be 7000 pallets a day, or more than 2.5 million pallets a year. Where and how are they going to store such volume? Kuwait already hosts the world's largest tire graveyard. Are we going to witness hosting the world's largest wooden pallet graveyard within the next few years as well?,” he asked.
He gave an example "Imagine that I import cooking oil from Europe. A 20-foot container would contain 1,000 cases of cooking oil, flat load (not palletized). Each case carries 6 bottles. A shipping company would charge KD850 per container. This means KD850/ 1000 cases = 0.850 Fils per case of just shipment cost. Per bottle, it would be 0.850/6 = almost 141 Fils. With the new rule, each 20ft container only carries 10 pallets, and each pallet can only carry 64 cases of cooking oil. So now, the same container can only carry 10 pallets x 64 = 640 cases. The container cost is the same, KD850. Each pallet costs about KD4. Thus, 10 x KD4 = KD40 for pallets. Now, the shipment/transportation cost of each case of cooking oil would be (KD850 + KD40)/640 cases = KD1.390. Per bottle, it would be KD1.390/6 = 231 Fils. That is an increase of over 60 percent (from 141 Fils), 90 Fils increase, PER BOTTLE”.
He pointed out that Kuwait is an importing-based country with more than 95 percent of the commodities being imported and with the current inflation; this policy is like adding fuel to the fire, adding that no other GCC countries have implemented such an ineffective rule. As for the Customs, this measure is considered part of the safety and security protocols in Customs Regulation No 95 of 2017.
According to economic expert Mohammed Ramadan, the new procedure might initially increase costs due to the unpreparedness of the labor force, which could lead to higher expenses, but once the workforce is trained, the procedure will become easy and smooth. "The law was introduced to address evident deficiencies and to enhance the overall quality of customs services. Importers must comply with these regulations as they serve the best interests of the country,” he noted.