Foreign shipping companies could halt services for cash-strapped Pakistan: report

ISLAMABAD: Shipping agents have warned Pakistan’s cash-strapped government that all exports could come to a halt as foreign shipping companies plan to halt services to the country after banks stopped handing them freight charges due to a lack of dollar availability, according to a media report Saturday.
Apart from the neighboring countries, almost all international logistics from Pakistan are transported by sea and any disruption could create serious problems for the country’s international trade, Pakistan Shipping Agents Association PSAA Chairman Abdul Rauf warned Finance Minister Ishaq Dar in a letter.
“If international trade is stopped, the economic situation will worsen,” the association warned, adding that foreign shipping lines are already considering ending their services to Pakistan due to reduced cargo volumes.
The PSAA Chairman also wrote letters to State Bank of Pakistan (SBP) Governor Jameel Ahmed, Commerce Minister Syed Naveed Namar and Maritime Affairs Minister Faisal Sabzwari, Dawn newspaper reported.
Rauf called on relevant ministries and departments to intervene to ensure the continuity of Pakistani maritime trade by allowing the immediate transfer of excess freight amounts to the respective foreign shipping companies.
“Due to stopping the outward transfer of excess freight amounts to the respective foreign shipping lines, this was hampering Pakistan’s maritime trade which is highly dependent on foreign shipping lines,” the letter added.
Rehman Malik, who has worked as an agent and is a member of the Pakistan Customs Agents Association, said he has never had a worse time in the past 40 years of his field work.
“We have thousands of shipping containers held up at Karachi port due to payment guarantees and most of them contain essential items like medicines, raw materials diagnostic equipment, chemicals and food,” he said.
“You can understand how badly all of this must hurt our manufacturing industries,” he said.
Maqbool Malik, president of the customs association, said thousands of containers were stuck due to lack of dollars.
However, the crisis is in export cargoes as all trade out of Pakistan is container based as there are no liquid or grain exports from the country.
The state-owned Pakistan National Shipping Company (PNSC) only handles imports of crude oil and other petroleum fuels through its 12 vessels.
Analysts say reserves are just enough for a month of imports.
Pakistan’s annual freight bill is around $5 billion, and foreign companies receive freight in international currencies, mainly the ‘greenback’.
The shipping agents pointed out that due to the current situation, the shipping industry is already suffering from economic ups and downs, and any further delay in paying their legitimate duties will limit Pakistan’s foreign trade.
However, speaking to the newspaper, former PSAA chairman Muhammad Rajpar said that Pakistan was not yet close to economic collapse and therefore the government still had time to seek a way out of the crisis. current crisis.
“We can always come up with innovative ideas to get out of tough times, one of them is to hedge the dollars and establish installments for payments to shipping lines,” Rajpar said.
Pakistan’s foreign exchange reserves have rapidly dwindled to more than $4 billion in recent weeks, raising fears the country could default and prompting the SBP to enforce strict controls on foreign payments.
Meanwhile, the Petroleum Division has warned the central bank that stocks of petroleum products could dry up as banks refuse to open and confirm letters of credit (LC) for imports.
Like other sectors, the oil industry in Pakistan faces hurdles in opening LCs due to shortage of US dollars and restrictions put in place by the SBP, according to The Express Tribune.


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