Shipping lines cry foul at higher Pak port tariffs
karachi — Shipping companies are threatening to scrap their Pakistan services after the South Asian country increased tariffs at its largest port in a blow to an industry that is already grappling with global overcapacity and low freight rates.
Hyundai Merchant Marine is “considering” dropping deployment of larger vessels in Pakistan, the South Korean company wrote in a letter to the Karachi Port Trust. Local agents say the tariff increase has caused distress among members.
Charges at Karachi have more than doubled for many types of vessels, according to Pakistan Ship’s Agents Association, after the operator on August 29 removed a cap on tariffs for vessels heavier than 45,000 gross registered tonnage (GRT).
“This revision causes a significant cost increase to all the carriers,” Kyounguk Lee, Hyundai’s then chief operating officer, wrote in the letter. “Port cost increase as well as extremely low ocean freight forces us to seriously consider” to drop services calling at Karachi port “in order to minimise our loss,” he wrote.
A Hyundai Merchant ship of 94,511 GRT for a two-day stay at Karachi will have to pay $82,905, which is 77 per cent higher than India’s Nhava Sheva port and 51 per cent more than Sri Lanka’s Colombo port, Lee wrote.
The higher tariff comes weeks before billionaire Li Ka-shing’s Hutchison Port Holdings is due to start commercial operations of the nation’s deepest port called South Asia Pakistan Terminals. Hutchinson’s new $1.4 billion port in Karachi, to be inaugurated by Pakistan’s Prime Minister Nawaz Sharif next month, will also have the higher tariffs.
The order “has caused anguish and distress to our members,” Amir Ali Jamal, secretary-general of Pakistan Ship’s Agents Association, wrote to the Karachi Port Trust.
The agents estimate that the new tariff would increase local port dues by 15.5 per cent to 118.2 per cent for vessels having GRT of 45,000 and 65,000 respectively. The port faces an annual loss of $5 million per vessel if any major shipping line decides to skip Pakistan, said Muhammad A. Rajpar, who is a former chairman of Pakistan Ship’s Agents Association. A spokesman for Karachi Port Trust said the authorities withdrew a cap that did not exist anywhere in the world.