Saudi Arabia is to force shipping companies to slash their fees by two-thirds in an effort to bring down the soaring price of goods, which along with rising house prices is being blamed for record high inflation in the kingdom.

Starting from November 11, Saudi Ports Authority (SPA) is making it compulsory for shipping companies to reduce their fees by two-thirds from 200 Saudi riyals ($53) to 50 riyals.

SPA said reducing the fees for delivery orders will help bring down inflation by lowering the cost of importing goods.

Inflation Saudi Arabia hit a seven-year high of 4.4% in August, driven mainly by a record 12.1% jump in rents and a 6.6% rise in prices of food products.

The move by SPA is part of a wider government effort to tackle inflation in the kingdom.

Saudi Arabia's King Abdullah earlier this month held crunch talks with the interior minister and provincial governors over how best to tackle the problem.

The advisory Shura Council has also called for action over the rising cost of living, and this month recommended a national wage increase to help people cope.

However, the shipping industry has reacted angrily to the new rule, with companies claiming it is not the shipping fees driving up costs and warning the ruling will impact on their bottom line and lead to job cuts.

“It is not us who are adding more cost to imported goods, it is custom brokers who are charging very high rates and making it expensive for merchants to get their goods out of the ports,” said the general manager, who requested to remain anonymous.

“We charge 200 riyals for issuing the delivery order for each bill of laden that might contain up to 20 containers, whereas custom brokers charge more than this amount for clearing each container out of customs.”

Ibrahim Ali, a Sudanese who has been working for a Saudi shipping company for more than 20 years, said that he was very concerned about his job following the SPA ruling.

“The reduction translates to 75% reduction in shipping companies’ earnings. I think companies will reduce their staff as well to compensate for that loss in income,” he said.

Fees that shipping companies in Saudi Arabia charge are almost equal to the fees in neighbouring gulf countries, according to the general manager, with the UAE charging 200 dirhams ($54.5), Bahrain 20 dinars ($53.1) and Kuwait 22 dinars ($79.4).