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Container carriers serving Pakistan’s ports are wrestling with an acute foreign exchange crisis in an already challenging market environment.
Local industry sources say the inability of importers to secure delivery orders for the timely clearance of cargo has created a bottleneck of alarming proportions at the port city of Karachi, which includes nearby Port Qasim.
“Thousands of containers are already stuck in the docks, creating a supply chain logjam,” one Karachi-based ship agent told. “The backlog is humongous.”
Concerned over the rapidly escalating situation, the Pakistan Ship Agents’ Association (PSAA) sent out notices to the State Bank of Pakistan and government leaders warning that shipping lines, represented by them, will consider suspending services out of the country in the absence of immediate action to mitigate the crisis.
“If international trade is stopped, the economic situation [in the country] will worsen,” the association noted.
With mounting industry pressure, the Pakistan government has promised to extend ad-hoc relief for importers coming forward to clear up accumulated boxes.
“The government has decided to waive demurrage and detention charges, which will now be borne by the national exchequer,” said a spokesperson for Pakistan’s ministry of maritime affairs in Karachi, yesterday.
“Around 20,000 containers are estimated to be stuck at the ports,” said Khurram Ijaz, VP of the Federation of Pakistan Chambers of Commerce and Industry.
Industry sources said the crisis had the potential to push many trading houses into bankruptcy.
Trade associations welcomed the waiver offer, but said cargo interests needed official port notices before they could begin the process of clearing the cargo logjams.
Pakistan has experienced serious economic setbacks in recent years but it is now at a critical juncture. According to local reports, the national dollar reserves have plunged to below $4.5bn, the lowest in eight years. The economic collapse is rooted in a combination of factors – political unrest, natural disasters, roaring inflation, high energy prices and foreign debt payment obligations.
The crisis closely mirrors the political/economic unrest that neighbouring Sri Lanka had to deal with in the recent past, including Colombo port stoppages due to dockworker protests and other chaotic conditions.
Meanwhile, Hapag-Lloyd has issued a trade advisory that its Indian Ocean Service (IO3), between India and Europe, will move its Pakistan call from Port Qasim to Karachi from 5 February
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North Europe’s container hub ports are bracing themselves for the weak January import volumes from Asia to continue through the year.
“The signals from our import customers are clear – the big shopping frenzy is over,” said Elvir Dzanic, CEO of Gothenburg Port Authority.
“Consumer goods, such as clothing, home electronics and so on, are areas where we’re seeing falling import volumes in general.
“We saw clear indications towards the end of 2022, and the initial trend in 2023 suggests a further decline, as product owners have full warehouses and are seeing lower demand, resulting in reduced transport requirements,” he added.
The bearish outlook from Mr Dzanic came after a strong performance last year by the Swedish port, the largest in Scandinavia.
Full-year container throughput at Gothenburg’s terminals increased 7% over 2021, to 885,000 teu, including a healthy 8% year-on-year increase in Q4, to 230,000 teu.
But the spike in the final period seems likely to be followed by some soft quarters, as ocean carriers are obliged to blank a high percentage of their advertised sailings from Asia to North Europe, due to very weak demand.
Indeed, speaking on the next podcast, CEO of Port of Hamburg Marketing Axel Mattern says he does not expect a pick-up in import volumes at Hamburg container terminals for the duration of the year.
In fact, Mr Mattern says, the port is anticipating “a significant drop in handling cargo” this year.
All the container ports in North Europe are experiencing lower volumes from fewer calls, which has reduced vessel wait times to virtually zero. One port executive told last week bad weather was now the only cause of delays to ship work.
Could one union be about to strike, while another is about to strike a deal? That is the question that faces negotiating teams on both sides of the long running and increasingly bitter round of disputes on the British railway network. With a fresh round of industrial action only a week away, there are contrasting views of the state of the dispute. The next planned stoppages are on Wednesday and Friday, 1 and 3 February.
Government sources have now admitted that it would be cheaper to have settled the dispute than see it through. That astonishing admission came from Huw Merriman, the rail minister, in answer to probing questions from the Transport Select Committee, a cross-party oversight body that informs the houses of the British parliament. Union leaders have already appeared before the committee.
MAXMODAL is now available in Chinese.
春节快乐！ 万事如意！Maxmodal 现在有中文版
As China begins its lunar new year celebrations this weekend, ocean carriers are desperately seeking visibility of export cargo demand for the first weeks and months of the Year of the Rabbit.
And with the short-term outlook looking bleaker by the day, 2M partners MSC and Maersk yesterday blanked a further six transpacific headhaul voyages – following those they announced on 12 January – through to the cancelled sailing of the MSC Barbara from Shanghai on 12 February.
Meanwhile, according to the latest analysis from consultant John McCown, container imports arriving at the main US west coast ports in December slumped by 19% on 2021, with the top 10 US gateways cumulatively seeing a “near record” decline for the month, of 16.5% fewer containers.
Although there were reports of a slight uptick in cargo this week for the remaining transpacific sailings ahead of Chinese New Year (CNY), it was nowhere near the usual pre-holiday rush, suggesting the normal slack season following the holiday could be much worse than feared by the lines.
Consequently, container spot rates on the route remained under pressure this week, although Xeneta’s XSI Asia to US west coast component was more or less unchanged, at $1,461 per 40ft, as some carriers baulked at further discounting.
In the same week during last year’s build up to CNY, which fell on 1 February, the Freightos Baltic Index (FBX) reading for Asia to the US west coast gained 3.5%, to $15,139 per 40ft, which included premium fees.
This week, spot rates for the US east coast are also under constant pressure, with Drewry’s WCI reading falling by 5%, to $3,432 per 40ft.
According to the McCown report, US east and Gulf coast ports saw 14% fewer import containers landed in December than the same month a year previously.
Moreover, the bull run of imports through the port of New York appears to have ended, its container terminals receiving 18% fewer boxes during the month.
