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Pakistan’s economic situation has gone from bad to worse. As a result, foreign shipping lines are unable to get the remittance for freight charges with a shortage of dollar at Pakistan’s ports. Shipping agents have warned the Pakistani government that their exports could come at a halt in light of the present situation as foreign shipping lines may stop their services. Pakistan’s shipping sector was already suffering due to economic ups and downs.
Abdul Rauf, President of the Pakistan Ship’s Agents Association (PSAA) wrote to the Pakistani Finance Minister Ishaq Dar, State Bank of Pakistan, Ministry of Commerce and Ministry of Maritime Affairs.
In his letters to the ministries and departments, he warned that any disruption to port activity may bring severe consequences for the country’s international trade. This is because with the exception of its neighbouring countries, almost all foreign trade in Pakistan takes place via its ports. He also suggested them to intervene in the matter, to ensure continuity in Pakistan’s seaborne trade by allowing outward remittance of surplus freight amounts to respective foreign shipping lines forthwith.
“Due to discontinuation of outward remittance of surplus freight amounts to respective foreign shipping lines, was hampering Pakistan’s seaborne trade which is heavily dependent on foreign shipping lines,” the letter added.
Rehman Malik, a shipping agent as well as a member of the All Pakistan Customs Agents Association, said he had never seen a worse time in the last 40 years of his working in the field. According to him, thousands of shipping containers, most of which are filled with essential items, have been stuck at the Karachi port because of shortage of dollars. These containers contain medicines, raw materials diagnostic equipment, chemicals and food items.
“You can understand how all this must be hurting our manufacturing industries,” Malik said.
It is a notable fact that all of Pakistan’s outbound trade is container based – there are no grains or liquid commodities to export. The state-owned Pakistan National Shipping Company (PNSC) only handles imports of crude oil and other petroleum fuel through its 12 vessels. Analysts say the reserves are just enough for one month of imports.
However, former PSAA chairman Muhammad Rajpar said that Pakistan was not close to an economic meltdown as yet, therefore the government still has time to seek a way out of the current crisis.
“We can always have innovative ideas to get out of difficult times, one of them is hedging of dollars and setting installments for the payments to the shipping companies.” Raipar said.
Pakistan’s foreign exchange reserves had dwindled rapidly to over USD 4 billion in recent weeks, creating fear the country may default and prompting the SP to apply strict control over foreign payments.
Meanwhile, as banks are refusing to open and confirm Letters of Credit (LCs) for imports, Pakistan’s oil reserves are also closing to empty.
