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PRICES: 1 of 2 shippers reduces rates; Will store prices follow?

By Eric Rosario

(Tumon, Guam) Air quality on Guam and around the world probably hasn't been this clean in 50 years. The Coronavirus pandemic has kept cars off the road for weeks now. Empty roads have meant an extraordinary global supply of oil that is challenging storage space.

According to The Guardian, this has meant the price of oil will be plummeting to about $10 a barrel.

So why hasn't that translated yet into much cheaper gas at the pumps, power bills, groceries, and everything else brought to Guam and sold in stores?

The Guam Chamber of Commerce, in white paper after white paper regarding the cost of goods and services on Guam in the past, points at the cost of shipping fuel to the island, and the cost of shipping itself.

In a nutshell, Guam's premier association of the biggest businesses blame shipping and its so-called inevitable costs due to Guam's distance and the legal shipping framework we live and die by.

That excuse ended today, at least with one of Guam and Micronesia's two main shipping lines - APL.

Effective April 1, APL has reduced its shipping rates, according to APL Guam president Charlie Hermosa.

"We actively review our fuel surcharge on a quarterly basis," Mr. Hermosa said. "Based on the fuel index we adjust our fuel surcharge accordingly."

What about Matson, the other shipping agent?

"A change in the fuel surcharge is under consideration," said Keoni Wagner, Maton's director of corporate communications.

The last time the fuel surcharge changed was on November 24, 2019, when Matson increased its fuel surcharge to 36 percent for the Guam and CNMI market, and up to 40 percent throughout the rest of Micronesia.

APL's fuel surcharge, unlike Matson's, is a flat fee and not a percentage of ocean freight.

Notwithstanding Matson's belated decision on a reduction, if any, at least 30 percent of the market now is receiving goods and shipping services at reduced cost, thanks to APL. The question now is, will the wholesalers and retailers who are benefiting from this reduction now reduce their prices?

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The joke is that there's a "fuel surcharge" in the first place. Fuel surcharges were introduced as a band-aid for extraordinarily high prices of oil when carriers didn't have time to revise rate schedules. Now here we are with record-cheap oil and... a fuel surcharge.

The CNMI's people are cheering because the price of gas just went down 8%. While oil prices went down what, 60% in the past month?

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