Bahamas Faces Persistently High Inter-Island Transport Costs
A market report for Eleuthera in the Bahamas underscores the continuing challenge of high inter-island transport costs. The fragmented nature of the archipelago, limited economies of scale, and inconsistent cargo schedules are cited as key drivers of high per-unit costs for moving goods. The report advises operators to consider bulk consolidation or regional "stock islands" to mitigate these expenses.
- A new government body, the National Trade Facilitation Committee (NTFC), has been established to reduce the cost of goods by up to one-third by diversifying trade and cutting out US intermediaries for products sourced from other regions, such as meat from Brazil. - In addition to freight logistics, the Bahamas maintains some of the highest customs tariffs in the Western Hemisphere, with an average duty rate of about 30% and a Value-Added-Tax that constitutes 45% of government revenue. - A recent external threat involved a proposed U.S. tariff of up to $1.5 million per port call on Chinese-built vessels, which comprise the majority of the Caribbean shipping fleet; it was projected this could have increased shipping costs by 50-60% before a regional exemption was secured. - The government has identified upgrades to key inter-island hubs, such as Potter's Cay Dock in Nassau, as a critical component of its strategy to improve the efficiency of trade between islands and make goods more affordable. - Third-party logistics providers offer a solution used by other luxury Caribbean resorts, which involves consolidating goods from multiple vendors at a single point, like Miami, to create full container loads and negotiate volume discounts on freight. - Other archipelagic nations like Indonesia and the Philippines are addressing similar logistics challenges by investing in Roll-on/Roll-off (RoRo) ferry services that integrate sea and land transport, and by digitalizing their supply chains with AI-based management and tracking platforms. - The country's infrastructure presents ongoing challenges that compound transport costs, including electricity rates that are four times higher than in the U.S. and limited internet connectivity on smaller "Family Islands". - For time-sensitive or smaller shipments, inter-island air travel is a primary mode of transport, with domestic flights on carriers like Bahamasair and Flamingo Air to key destinations such as the Exumas and Eleuthera costing approximately $125 to $150.
