Pakistan ports face export bottleneck as India bans transit, forcing shipping lines to reroute

Karachi Port in Karachi, Pakistan (Photo: Reuters/Phaata)

Pakistan is facing a “big backlog” of export containers at its ports as many international shipping lines have begun bypassing the country following India’s decision to ban ships carrying Pakistani cargo from transiting through its territory, officials and shipping documents obtained by Arab News on Friday confirmed.

The disruption has prompted several global shipping lines to impose emergency operating surcharges on cargo from Pakistan, citing the “significant impact” of regional geopolitical tensions on their operations.

The move is expected to increase shipping costs and ultimately consumer prices in Pakistan, a country of more than 240 million people that is currently struggling with economic hardship.

“The European shipping services are bypassing Pakistan ports after India’s ban on the transit of ships loaded with cargoes from Pakistan,” said Syed Tahir Hussain, secretary general of the Pakistan Ship Agents Association (PSAA).

He accused New Delhi of trying to undermine Pakistan’s recovering economy, which has shown signs of stabilizing thanks to a $7 billion loan program from the International Monetary Fund (IMF).

PSAA Chairman Mohammed A. Rajpar called India’s move “unwarranted” and a violation of international conventions, saying it was an attempt to discourage shipping lines from coming to Pakistan.

The move comes as Islamabad tries to break out of its growth-recession cycle by boosting exports, which rose 6% to $27 billion in the year to April, according to the Pakistan Bureau of Statistics.

Previously, many international shipping lines used major Indian ports such as Mundra and Nhava Sheva to transship cargo from Pakistan in the “remaining on board” (ROB) freight.

However, India last week banned the practice, forcing several shipping lines to drop Pakistani ports from their service routes and launch separate feeder routes, which handled about $87 billion worth of trade last year.

The bulk of Pakistan’s container cargo is handled through major ports such as South Asia Pakistan Terminal (SAPT) operated by CH Hutchison Holdings, Qasim International Container Terminal (QICT) operated by DP World and Karachi Gateway Terminal managed by Abu Dhabi Ports Group.

“Some vessels carrying Pakistan’s exports sailed from QICT were not allowed berthing in India,” said Hussain, who represents more than 50 international shipping lines.

“They had to divert to Dubai and other nearby ports,” he added, without specifying when.

Shipping documents obtained by Arab News show that at least four vessels were denied entry by Indian authorities this week for carrying cargo from Karachi. They were then diverted to Colombo, Sri Lanka, and Jebel Ali, UAE.

Swiss shipping line MSC Mediterranean Shipping diverted all cargo to Colombo instead of QICT as originally planned on May 6, via the MSC Positano V-JP526R.

MSC said in a note to customers that the change was “due to the current geopolitical situation and restrictions on imports and exports via/from India.”

French shipping group CMA CGM has also removed Karachi from at least four of its services, citing the need to adjust operations to and from Pakistan.

“BIG BACKLOG” AT PORTS

Export congestion is growing at Pakistani ports as hundreds of containers wait to be shipped.

“There is big backlog,” said Khurram Mukhtar, Patron-in-Chief of the Pakistan Textile Exporters Association (PTEA).

The textile industry is Pakistan’s largest export sector, generating $17 billion last year.

Mukhtar noted that most shipping lines are now planning to divert exports to Colombo, with system updates expected to be completed by Monday.

MSC has launched a “Pakistan-Colombo Shuttle Service,” a weekly feeder vessel to carry export containers to Sri Lanka, which then connects to global destinations.

Amid the current crisis, international shipping lines have started imposing surcharges on Pakistani importers and exporters.

CMA CGM has introduced an Emergency Operation Surcharge (EORS) of up to $800 per container for cargo bound for the US, Latin America and Australia, effective from May 15 to June 6.

The French group said the surcharge is necessary to maintain service reliability and safety during the current period. CMA CGM currently operates more than 250 global service routes with a fleet of 650 vessels.

“Pakistan’s exports are suffering,” said a senior official at one of Pakistan’s major container ports, speaking on condition of anonymity. 

“This will lead to the buildup of a huge container backlog at Pakistani ports,” he warned. “There will be issues like port demurrages. The shipping lines will be charging the consignees with detentions.”

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Source: Phaata.com (According to Arab News)

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