LAHORE: As the shipping companies has increased their freight charges by 700 percent after the reopening of global trade amidst Covid-19, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has appealed the government to intervene so that exports growth could be sustained.
PRGMEA Central Chairman Sohail A Sheikh, in a letter sent to Federal Minister for Maritime Affairs Ali Zaidi, appealed him to control the situation, asking the international shipping lines to rationalize cost of containerized cargo, as it has offset the positive impact of incentives provided by the government.
Sohail Sheikh pointed out that both regional as well as the international shipping lines seemed to have formed a cartel to impose exorbitantly high freight charges in a bid to cash in on the post-Covid situation. He said that Pakistan’s importers and exporters pay to shipping companies at least 5 billion dollars annually in international freight charges. He said that the jump in international freight charges had increased the cost of doing business in Pakistan and apparel exporters could not remain competitive in the international market if government did not interfere.
He said that freight charges for cargo in a 20-feet container arriving from China to Pakistan have presently increased to around $3,000 from almost $600 of pre-Covid time on the plea of high growth despite the fact that lockdowns have been ended for a long time and now there is a routine traffic of vessels. He said that freight charges have surged abnormally and exports industry has never seen such a huge jump in rates over the past 50 years across the world.
It seems that Covid-19 has provided an opportunity for international shipping companies to increase freight charges. “We know that government is not responsible for the situation in international trade. And it is also fact there was no short-term solution for the government. However, in the long run, it should enhance the number of shipping companies in Pakistan, so that it could intervene.
Unfortunately, the Pakistan National Shipping Corporation (PNSC) doesn’t have sufficient capacity to fill the space, proposing it to acquire containerized ships on lease to facilitate the exporters, as this strategy could help the government keep freight cost in control and making textile exports competitive in global market.
PRGMEA Central chairman said that Pakistan mostly import cargoes through the Far Eastern countries like Thailand, China, Hong Kong and Singapore, and send export to the EU, the USA and the Middle East.
Copyright Business Recorder, 2021