LAHORE – As shipping companies’ freight charges skyrocketed by up to 700% after global trade reopened amid Covid-19, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has called on the government to intervene so that export growth could be sustained.
PRGMEA Central Chairman Sohail A. Sheikh in a letter to Federal Minister of Maritime Affairs Ali Zaidi called on him to control the situation, asking international shipping companies to rationalize the cost of containerized freight as this has compensated the positive impact of the incentives provided. by the government.
Sohail Sheikh pointed out that regional and international shipping lines appear to have formed a cartel to impose exorbitant shipping charges in a bid to take advantage of the post-Covid situation. He said Pakistani importers and exporters pay shipping companies at least $5 billion a year in international freight charges. He said rising international transport costs had increased the cost of doing business in Pakistan and garment exporters could not stay competitive in the international market if the government did not intervene.
He said freight charges for cargo in a 20ft container from China to Pakistan have currently increased to around $3,000 from almost $600 before Covid on the pretext of strong growth despite the fact that the closures are long over. and now there is routine ship traffic. He said freight charges have increased abnormally and the export industry has never seen such an increase in rates in the past 50 years across the world.
It seems that Covid-19 has provided international shipping companies with an opportunity to increase shipping costs. “We know that the government is not responsible for the international trade situation. And it is also a fact that there was no short-term solution for the government. However, in the long term, he should increase the number of shipping companies in Pakistan, so that he can intervene.
Unfortunately, the Pakistan National Shipping Corporation (PNSC) does not have enough capacity to fill the gap, offering to acquire containerized vessels on lease to facilitate exporters, as this strategy could help the government control the cost of freight and textile exports. competitive in the global market.
PRGMEA Central Chairman said Pakistan mainly imports cargo via Far Eastern countries like Thailand, China, Hong Kong and Singapore, and exports to EU, US and Middle East .
He recalled that the business community last year during the lockdown period also called on the government to approach international shipping companies and ask them to waive demurrage and detention charges in Pakistan as per the waiver of detention fees announced around the world due to lockdowns, but authorities have done nothing about it.