Syria crisis to drive up prices of Turkish imports
Lebanon will see an increase in retail prices of Turkish-made garments as of next month if instability in Syria persists, Lebanese merchants who import goods from Turkey via Syria told The Daily Tuesday.
The transportation cost of Turkish goods to Lebanon has nearly doubled as the security situation in Syria continued to deteriorate since the popular uprising broke out nine months ago against the Syrian regime.
The tense security conditions in Syria have discouraged Turkey from allowing its trucks that are bound to Lebanon from using Syrian territories as a transit point and ultimately forced Lebanese merchants to ship Turkish goods via air rather than land transport, doubling the transportation cost from nearly $3.5 to $7.5 per kg. While retail prices remain unchanged so far, Nicolas Khoury, a wholesale trader, told The Daily Star that stores will be compelled to hike prices as soon as they receive new goods at a higher cost.
“We have been informing our clients that we will deliver goods at a higher cost to cover for the increased transportation cost of new shipments. For example, the transportation cost of a double sized blanket, which weighs on average 4 kilos has almost doubled from $15 to $28,” Khoury said.
The higher transportation cost incurred by wholesalers would raise retail prices by an even higher percentage, since retailers sell their products at 1.6 to 2.5 times the cost of goods, Khoury said.
Mazen Abdallah, the owner of several retail stores that import garments directly from Turkey, said the cost of land transportation had been as low as $2.25 per kg before the crisis in Syria began to unfold. “It went up to $5 per kg nearly six months ago after turmoil hit Syria,” Abdallah added. Not only has the cost of land transportation doubled, but also the delivery time, Abdallah said.
Though transit through Syria remains open despite Damascus’ recent suspension of a 2004 free trade agreement with Turkey in retaliation for economic sanctions imposed by Ankara, tensions between the two countries have hampered Turkey’s trade with the Middle East.
Land transport across the Syrian-Turkish border has been delayed over the past week, with hundreds of trucks stranded on the border. While land transportation used to take between three to four days, today the delivery of goods could take up to a week to 10 days, Abdallah said.
Adding to the woes of Lebanese importers, Turkish cargo agencies have recently informed Lebanese importers that “shipments will take place at your own responsibility.”
Abdallah said two Lebanese importers have recently incurred losses of up to $15,000 in missing shipments transported through Syria. The shift to air freight has raised transportation prices per kg of goods up to $9, Abdallah said. But the cost of land transportation is expected to drop if the security situation in Syria sees improvement.
Another Lebanese merchant said he ordered a shipment using land transport this week at $5.25 per kg and expects the goods to be delivered within 10 days. While maritime shipping seems like a reasonable third option, its inconvenience leaves Lebanese merchants doomed to choose between risking to lose their shipments in transit through Syria or paying nearly double for air freight.
Both Khoury and Abdallah said maritime shipping was inconvenient because of long delivery times caused by the near-absence of direct shipping to Lebanon. “It takes between 15 to 20 days for the shipment to arrive to Beirut port and another week for cargo clearance at the port. Thus, the delivery of an order takes between three and four weeks and the merchant can miss the holiday season, for example,” Khoury said. While direct maritime shipping to Beirut exists, a merchant would have to order an entire container of goods for such a service, leaving him with excess merchandise that he is incapable of selling.
Abdallah also said the increased cost of goods coupled with operational expenses would eventually lead to higher prices. “We cannot sustain this pace for more than one month,” Abdallah said.
Lebanese-Turkish bilateral trade volume reached $750 million as of the end October 2011, a 23 percent increase compared to last year. Turkey ranks eighth in Lebanon’s imports with a volume of around $550 million and fifth in exports with a volume of $200 million. So far, the effect of turmoil in Syria on Lebanese exports to Turkey remains unclear.