freight costs surge
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Freight costs surge manifold as industry faces logistics strike aftershocks

ByJustpaste.in

Pakistan’s export sector has been hit by a fresh logistics shock after the nine-day goods transport strike, with exporters now facing an extraordinary increase in sea freight rates, a shortage of shipping space and mounting costs on delayed cargo, according to economists and trade experts.

Experts said the strike may have ended, but its consequences are now being felt at ports, factories and in export markets. Containers that could not reach Karachi Port and Port Qasim during the disruption missed scheduled vessels, leaving exporters scrambling to secure space on subsequent shipments at sharply higher freight rates.

According to information shared by exporters, freight charges to the US West Coast have surged from around $1,800 to as high as $8,500 per container, while rates to the US East Coast have reportedly risen from $1,800 to $8,000 per container. Additional General Rate Increases, surcharges and other carrier charges have further increased the burden.

Experts said these developments have placed Pakistani exporters in an extremely difficult position. Freight charges rising by more than 300 percent cannot easily be absorbed by exporters and could wipe out the profit margin on entire export orders, they added.

They said the disruption in domestic transport created a serious bottleneck in the export supply chain. Thousands of containers remained stuck at factories and warehouses and could not reach the ports within terminal cut-off times. As a result, exporters faced missed bookings, vessel rollovers, cancellations, detention, demurrage and storage charges.

Economists said the reported loss of around Rs450 billion during the nine-day strike shows the scale of the disruption, but the real damage could be much greater if delayed shipments lead to cancelled orders and the loss of overseas buyers.

International buyers expect certainty and timely delivery, experts noted. A buyer waiting for goods does not necessarily distinguish between a transport strike, port congestion or any other domestic problem in Pakistan. If deliveries are repeatedly delayed, the buyer may simply shift future orders to another country.

Pakistan is competing with countries that have invested heavily in efficient ports, transport networks and export logistics. Pakistani manufacturers already face high energy prices, expensive financing, taxation pressures and rising input costs. Adding an unpredictable freight and shipping crisis to these problems further weakens their ability to compete.

Experts pointed out that exporters operating under C&F, CFR and other freight-inclusive arrangements are directly exposed to the increase in shipping costs. Even FOB exporters are suffering because the shortage of vessel space and missed sailing schedules can delay shipments and damage business relationships.

“Export growth is not possible without a dependable logistics system,” experts said. “It is not enough to announce export incentives if containers cannot move smoothly from factories to ports and from ports to international markets.”

They urged the government to immediately hold consultations with shipping lines, port authorities, terminal operators, freight forwarders, transporters and export associations to restore adequate vessel space for Pakistani cargo and address the sudden escalation in freight rates.

Experts said exporters whose shipments were delayed because of circumstances beyond their control should not be left to bear excessive penalties and charges. A mechanism should be developed to facilitate stranded cargo and minimise avoidable detention, demurrage and storage costs.

They also called for a permanent coordination mechanism between the government and the private sector to deal with transport and logistics disruptions before they turn into national economic crises.

Experts said Pakistan needs to treat logistics as a core part of its trade and export policy. Road transport, ports, terminals, shipping services and customs clearance are all parts of the same export chain, and a breakdown at one point can affect the entire system.

Economists stressed that Pakistan urgently needs greater export earnings to strengthen its economy and foreign exchange reserves. Every unnecessary increase in freight costs means more money leaving the country and less income remaining with Pakistani manufacturers and exporters.

They urged the authorities to take immediate and practical steps to help exporters clear delayed shipments, recover lost shipping schedules and retain the confidence of international buyers, warning that predictable freight rates, available shipping space and an uninterrupted logistics system are essential for Pakistan to remain competitive in international markets.

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