Ship Supplies – Are Freight Charges Necessary?

In this post I will answer a question that I get very often from ship captains and ship owners.

Why do I have to pay freight charges when ordering ship supplies while in port on Grand Bahama?

 

This is a popular concern, and to answer the question straightforward, No, you do not have pay those freight charges, however I will show you how paying those charges not only saves you money, but also results in better quality products when you purchase vessel stores.

So, your ship just left Europe and is making a port call to Grand Bahama Island. In Grand Bahama, your ship is probably getting bunkers and doing a crew transfer, and it just so happens that supplies are rationing for your next leg of the journey. So you assume you can save some money by purchasing vessel stores directly on Grand Bahama and simply bundle all the services while in port. It sounds simple right? Well why is your ship agent telling you that you must pay freight charges? Here’s  why…..

Tax Free

In the Bahamas, we have no direct form of taxation; however, our Government charges a customs duty on all items shipped in to the country. This duty ranges  up to 100% of the cost of the item and the cost to ship it.

For Example;

You buy something at a cost of $400 and your shipping cost is $100. Let’s say the customs duty is 35%.

Now you will have to pay an additional 35% on top of what you bought the item for added to the freight costs.

$400(cost of item) + $100 (freight cost) = $500.00 (Landed value of the item) x 35% = $175.00 (Customs duty).

$175.00 + $500.00 = $675.00 (cost of item after payment of customs duties)

What Residents Pay For Provisions

So local merchants on the island are also charged this duty and so the cost of an item includes merchant purchase costs from the mainland, freight costs, duty costs and the markup from the merchant. This can be up to 3-4 times more than the basic cost of the item if purchased from the original seller. These are the costs residents pay;

 

How Ships can save money

Ships requesting large quantities of food supplies can save a bundle of cash if the products are purchased directly from the original supplier located off of the island. Using this method, you, the customer will only pay the following costs;

Also, keep in mind that perishable food supplies such as fruits and vegetables can become overripe sitting in the local stores. Sometimes there are simply not sufficient amounts of foods available to fulfill the order.

To Sum Up

So in order to get best quality at an affordable price, we import the vessel stores and vessel supplies. Even with freight charges it is much cheaper because we pay no customs duty.

It is important to note that you can obtain almost any vessel supplies you need as long as there is sufficient time to do so. Once you agree to the quote from your ships agency, it takes about 4 days before your supplies can be delivered to your ship.

The convenience of getting the vessel supplies you ordered in good quality, bundled with all the other great maritime services available on Grand Bahama is definitely worth the short wait.

I’d like to take the time to answer your questions, so if you have any other questions specific to maritime services in the Bahamas, email me at joanel.louis@kairosmaritime.com or ask in the comment box below.

Update: As of January 1, 2015 – There is a value added tax (VAT) in effect throughout the Bahamas