Red Sea crisis expected to raise several prices in Kosovo

Many marine companies have banned their cargo ships from sailing this sea and have been navigationing them in other longer directions because of Huth's attack on them.

Consequently, the company “Elkos Group” from Kosovo has to pay up to 6,000 euros more for a 25-ton container coming from China.

“From two thousand to eight thousand euros has increased the cost of shipping”, says owner Ramiz Kelmendi for Radio Free Europe (REL).

Other countries have already warned that they face the risk of rising consumer prices and slowing economic growth due to the crisis.

How did the crisis begin?
The rebels of Huth in Yemen, backed by Iran, have begun attacking trade ships at the Red Sea with rockets and fears late last year, following the outbreak of war between Israel and the US-declared terrorist group Hamas, respectively.

The attacks have continued despite the intervention of Western powers against the Huth rebels earlier this month.

They have prevented shipping on the Suez Canal, the fastest sea route between Asia and Europe, and through which some 15 percent of global sea trade is passed.

Consequently, some of the largest shipping companies have redirected ships on a much longer route around Africa.

Sea Transport After the Crisis at the Red Sea

Since the Huth rebels are hindering shipping near the coast of Yemen and the Red Sea, many companies are avoiding this route across Africa.

Delay to Three Weeks
Kelmendi says that, prior to the crisis, it has taken up to forty days for the admission of a container at the Greek port of Thessaloniki or Durres in Albania “now needs up to 60 days”.

We have one year agreements with companies there [in China] and they must be implemented... We haven't interrupted any shipments, just because there are delays and we pay more expensive transportation... The shipments contain raw materials for production lines and final products, such as white technique and electronic equipment”, Kelmendi says.

His company is among the biggest distributors authorised in Kosovo by dozens of international brands.

Kelmendi says that the increase in the cost of transportation, at present, is not seen in consumers, because “we are working with minimal profit”.

“ ... but, if this situation lasts, there may be a change of prices on the Kosovo market”, he warns.

With delays in receiving shipments from Asia to Kosovo, the Pristina-based cargo and logistics company “Pro Transport” has also faced delays.

Owner Faton Demaj tells Radio Free Europe that several containers of products such as toys, textiles and tools, which have been ordered by Kosovo firms since late November, have not yet arrived.

This, automatically, increases product prices on the market”, he says.

Demaj says he has already announced to customers that there will be considerable increase in transportation prices, but does not specify more.

Any information we receive from the marine lines, in written form, we send to companies we cooperate with. We try to inform them in time”, he says.

How much does Kosovo import from China?
Kosovo depends on importing foreign products, both from neighbouring countries, from the European Union and beyond.

Central Bank of Kosovo data (BQK) shows that, last year, the country has imported products worth 5.8 billion euros.

The value of exports, meanwhile, remains below a billion euros.
Kosovo, according to the CEC, does about 10 percent of foreign trade with China.

In 2022, the value of imports from China was 548m euros, while in January-September of 2023 it was 460m.

For the last three months of 2023, Radio Free Europe has provided data from Kosovo Customs, according to which Kosovo has imported goods worth 189m euros from China.

If the record of the last two months of 2023 When the Red Sea crisis has even begun, compared to the last two months of 2022, it turns out that the value of imports from China has been higher.

According to Kosovo Customs, in November and December 2022 more than 90m euros of products were imported, while in November and December 2023 over 124m.

Among the goods imported from China were air conditioning machines, chromium concentrations, labor tools, electronic supplementary parts of cars, smart phones, mattresses from various materials, plastics, textiles, and so on.

Inevitable Effects
Kosovo, as well as other countries in the world, has faced rising prices of products and services in recent years. This, as Russia's war with Ukraine has spurred inflation, particularly increasing the prices of oil and food.

Arrian Zeka, director of the American Economic Ode in Kosovo, says even the consequences of the Red Sea crisis will be inevitable for Kosovo, since the country imports from China.

According to him, there is expected to be a price increase of some products, but the best “of all is that food goods, Kosovo does not import them in large amounts from China and Asian states”.

From that region, India is second, behind China, which exports to Kosovo.

I hope that, at least, there will be no further increase in the prices of daily consumer products, including food and nonalcohol beverages”, Zeka tells Radio Free Europe.

Kosovo imports most of its food products from surrounding countries and those of the EU.

Even one of its neighbours, Northern Macedonia, has warned through its Chamber of Commerce of increasing product prices as a result of the Red Sea crisis.

This week, European Commission Deputy Chairman Valdis Dombrovski, who oversees the economy of the 27 EU nations, said the bloc faces the risk of rising consumer prices and slowing economic growth due to sea transport cuts through the Red Sea.

He said that the traffic of shipping through this sea has dropped by 22 percent in one month as a result of the attacks by Huth's rebels.