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March 9, 2021

Ships that never sailed

Business

March 9, 2021

LAHORE: Global maritime trade volume reached 10.7 billion tons, while the ports in Pakistan handle hardly 40 million tons depicting the low volume of trade with the rest of the world.

Trade through ships is low because the government policies and the regulations at ports make import or export expensive for small and medium entrepreneurs. The high cost associated with maritime trade marginalises our exports and increases the cost of imported goods in the domestic market. Maritime transport is the backbone of international trade and the global economy. Around 80 percent of global trade by volume and over 70 percent by value is carried by sea and handled by ports worldwide, according to UNCTAD.

Out of global maritime trade volume of 10.7 billion tons, containerised trade accounts for 17.1 percent of the total and bulk dry cargo 29.9 percent. Pakistan has borders with numerous landlocked countries and states though having seaports but could benefit more if they import through Pakistani ports. It is however unfortunate that due to inefficiency at our ports the movement of goods to and from Pakistan is delayed due to congestion at our ports.

Gwadar that is still not operational (barring few cargoes) has the capability to cater to the needs of all its neighbours including Central Asian States, China and even India (Indian Punjab). The Karachi port is currently the largest and busiest deep-water seaport of the country, handling about 60 percent of the nation's cargo (25 million tons per annum). Traders (both importers and exporters) complain of very high port charges at our sea ports. Some of these charges are levied when the importers or exporters are not at fault. Port charges are the fees that shipping operators and their customers pay to port authorities for the use of the port's facilities and services.

For instance, in case of delay or dispute in custom clearance they are made to pay demurrage charges to the port handlers (the goods remain in port premises before clearance as the customs do not have sufficient land to move goods to their premises for clearance. In case the importer’s stance is vindicated the government demurrages are waived but they have to pay the charges to the port handlers. Another aspect in this regard is that the container has to be handed back to the shipping company within three days after the ship gets the berth. In case of delay the ships charge from $100-140 as the rent of the container.

A consignment of 10-20 containers delayed for over 13 days would cost a fortune to the importer. And these delays are common. Another loophole is that for the containers booked for upcountry the shipping lines demand that containers be handed over to them in Karachi. The importer has to bear the cost of freight to Karachi plus additional $200 to $420 per container as the time taken for transportation. Logically and by global norms the shipping lines collect their containers from the place of destination. There are many other hurdles that increase the cost of goods at the clearance stage, which are undermining the viability of our manufactured goods and exports. Other countries have also handed over their ports to the private handlers, but traders there do not face such problems.

According to Ali Zaidi, the Minister for shipping and ports the agreements with port handlers were signed by past regimes and have long duration. The government, he regretted could not change the terms. However, he added a plan was afoot under which Pakistan National Shipping Corporation would acquire containers in large quantities and soon after unloading from ships would transfer the goods from ships container to their own and transfer them to state land to eliminate container charges and undue demurrages.

This will take years to materialise and in the meantime the traders would continue to suffer. Inability of the Railways to efficiently operate freight trains from Karachi to upcountry also increases the cost of all upcountry consignments. Pakistan unfortunately has no creditable shipping line. The PNSC basically brings petroleum products and liquids from abroad.

A few of its ships handle bulk cargo like grains etc. Globally Greece has the largest cargo fleet in the world (17.3 percent) followed by, Japan11.6 percent, China 9.6 percent and Germany 5.6 percent. India is at number 16 in ship ownership, we are nowhere. In ship breaking India is the leader followed closely by Bangladesh and Pakistan third breaking half the number of ships compared with Bangladesh.