Goods Transport Strike Causes Rs450 Billion Losses to Export Sector

KARACHI: Pakistan’s nine-day goods transport strike has caused an estimated loss of Rs450 billion to the country’s export-oriented sectors, while exporters have raised serious concerns over a sharp increase in sea freight charges and the shortage of shipping space for consignments.

Representatives of value-added textile, knitwear, readymade garments, towel and other export sectors said the prolonged strike had almost completely disrupted the movement of export cargo, resulting in delays, additional costs and the loss of valuable shipping space.

Chief Coordinator of Exporters’ Associations Muhammad Javed Bilwani, PHMA Central Chairman Muhammad Babar Khan, TMA’s Athar Bari and other representatives said the strike, which began on August 8, severely disrupted the transportation of export containers from factories and warehouses to Karachi Port and Port Qasim.

They said containers remained stranded at factories and warehouses and failed to reach ports within terminal cut-off times. As a result, bookings were cancelled, shipments were shifted to subsequent vessels, and exporters faced detention, demurrage and storage charges.

According to estimates cited by the exporters, the strike caused economic losses of around Rs50 billion per day, bringing the total estimated loss over nine days to approximately Rs450 billion.

The exporters said that following the disruption, shipping lines had reportedly reduced the available vessel capacity for cargo originating from Pakistan and shifted some of the capacity to other markets. This had resulted in an extraordinary increase in freight rates.

According to freight information received by exporters, sea freight to the US West Coast has increased from around $1,800 to $8,500 per container, representing an increase of approximately 372 percent. Freight rates for the US East Coast have risen from around $1,800 to $8,000 per container, an increase of nearly 344 percent.

In addition, exporters are reportedly being forced to bear further increases of up to $1,000 per container under General Rate Increases (GRIs), surcharges and other carrier-imposed adjustments during August 14 and 15.

Javed Bilwani termed the increase completely unaffordable for Pakistani exporters, saying they could not absorb freight hikes of more than 300 percent without suffering a dangerous decline in profit margins and losing their competitiveness in international markets.

He said substantial amounts of foreign exchange were being transferred abroad in the form of additional freight charges. Around 65 percent of Pakistan’s export shipments are made on an FOB basis, while approximately 35 percent are conducted under C&F, CFR and other freight-inclusive terms, making international freight costs a direct burden on exporters in a significant portion of shipments.

However, exporters said FOB shipments were also being severely affected by vessel-space shortages, shipment delays and the risk of losing international buyers.

The exporters urged the government not to remain a silent observer, stressing that the disruption had caused heavy losses to exporters and deprived the country of valuable foreign exchange.

They said export targets could not be achieved through policy announcements and incentives alone. The government must ensure a reliable, uninterrupted and internationally competitive export logistics system to protect the country’s export sector and sustain its position in global markets.