Foreign shipping companies may stop services for poor Pakistan: Report – Times of India

ISLAMABAD: Shipping agents have warned the ailing Pakistani government that all exports could come to a halt as foreign shipping companies consider stopping their services to the country after banks stopped paying freight charges to them due to lack of available dollars, according to a media report on Saturday.
Apart from bordering countries, almost all international logistics from Pakistan are handled by sea and any disruption could cause serious problems for the country’s international trade. Pakistan Ship Agents Association (PSAA) Chairman Abdul Rauf warned Finance Minister Ishaq Dar via a letter.
“If international trade is halted, the economic situation will worsen,” the association warned, adding that the foreign shipping companies are already considering stopping their services in 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 requested the relevant ministries and departments to intervene to ensure continuity in Pakistan’s overseas trade by immediately authorizing the outgoing transfer of excess cargo amounts to the respective foreign shipping companies.
“Due to the cessation of outgoing remittance of excess cargo amounts to respective foreign shipping companies, it hampered the overseas trade of Pakistan which is highly dependent on foreign shipping companies,” the letter added.
Rehman Malik, who has worked as an agent and is a member of the All Pakistan Customs Agents Association, said he had never had a worse time in the last 40 years of working in the field.
“We have held up thousands of shipping containers at the port of Karachi due to payment guarantees and most of them have essential items such as medicines, diagnostic equipment for raw materials, chemicals and food,” he said.
“You understand how all this must hurt our manufacturing industry,” he said.
Maqbool Malik, chairman of the customs body, said thousands of containers have been stranded due to a shortage of dollars.
However, the crisis concerns the export cargoes as all outgoing trade from Pakistan is based on containers as there is no export of liquids or grain from the country.
The state-owned Pakistan National Shipping Company (PNSC) only handles imports of crude oil and other petroleum fuels through its 12 ships.
Analysts say the reserves are just enough for a month of imports.
Pakistan’s annual freight bill is about $5 billion, and foreign companies receive the cost in international currency, primarily the “dollar”.
The shipping agents have pointed out that due to the current state of affairs, the shipping industry has already suffered economic ups and downs, and any further delays in paying their legitimate dues will limit Pakistan’s foreign trade.
However, speaking to the newspaper, former PSAA chairman Muhammad Rajpar said that Pakistan was not yet close to an economic collapse, and therefore the government still has time to find a way out of the current crisis.
“We can always have innovative ideas to get out of tough times, one of them is dollar hedging and installment payments for the payments to the shipping companies,” said Rajpar.
Pakistan’s foreign exchange reserves had rapidly dwindled to more than $4 billion in recent weeks, sparking fears that the country would default and prompting the SBP to exercise strict controls over 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 (LCs) for imports.
Like other industries, Pakistan’s oil industry is facing hurdles in opening LCs due to the shortage of US dollars and restrictions imposed by the SBP, according to The Express Tribune.

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