Goundar Shipping Limited’s decision to suspend services brings home reality that we are at mercy of foreign suppliers
We can’t blame Goundar Shipping Limited for suspending services because fuel price increases have made operations unprofitable. Even when the fuel prices were lower last year it still made a loss of $4 million.
With higher prices now, the loss trajectory is expected to keep rising. Managing director George Goundar admits they cannot continue to sustain the losses indefinitely. The only way they can stop the losses is to put services on hold.
The implications are huge. Jobs are on the line and travel to the islands serviced by the company will be seriously disrupted.
Hopefully, this is just a temporary measure and soon the situation will improve and the services resume.
But looking at the company’s predicament, two things need to happen before a resumption of services. Number one is that the fuel prices must come down or the Government increases its franchise subsidy. The Government can only increase the subsidy if it has the funds available. It will go through the usual process to make a decision. Any decision will have to be weighed against other considerations of expenditure commitments. Which area can it cut its spending on to divert the savings to the shipping franchise. It will be a tough decision and governments around the world are facing challenges of rising costs and inflation.
In the United States, for example, the cost of living has been rising steadily for food, petrol, transport and energy bills.
From January to so far this month, the inflation rate has reached an all-time high never seen since the 1980s. It has been blamed on COVID-19 and the supply chain crisis caused by the war in Ukraine. This is the biggest domestic challenge facing President Joe Biden’s administration at this time. He is not alone. It’s also happening in New Zealand and Australia.
Here, Prime Minister Voreqe Bainimarama and his FijiFirst Government are facing the same challenge.
Goundar Shipping’s problem underscores this challenge. It’s times like this, organisations take austerity measures to survive. For Goundar Shipping, it could come down to letting go of employees to take leave they are owed or even unpaid leave to cut losses.
It’s the reality of the times we live in which calls for belt-tightening.