Pakistan has kick-started the process of cutting port charges to bring down the cost of imports and exports and to increase its footprints in facilitating regional and international trade transportation through sea.
“The port charges come somewhere between $50,000 to $100,000 per ship depending upon the size of the ship and the number of days it spends to download or upload cargo at a port in the country,” said Pakistan Ship’s Agents Association (PSAA) Chairman Mohammed Rajpar while talking to The Express Tribune.
He spoke after attending the very first meeting of the committee formed by the cabinet to rationalise port charges.
The committee has been tasked to reduce the cost of doing business and increase the country’s competitiveness in facilitating regional and international trade transportation through offering better price and quality services.
The major port charges include port dues, pilotage in, pilotage out, pilotage charges, ship berthing and storage, it was learnt.
“Our competition (in the region) is with ports of Colombo in Sri Lanka, Salalah in Oman and Jebel Ali in Dubai in transshipment,” said Rapar, who is also a member of the committee.
Local traders alone pay an estimated $5-6 billion in freight charges, including port charges, for import and export in a year, it was learnt.
The port charges are targeted to be rationalised to create ease of doing business like the incumbent government has been doing in all sectors to reduce the cost of doing business in Pakistan, he said.
To recall, the cost of doing business has gone up in the country following increase in power tariff, passing on the increase in international oil prices to local consumers. Besides, the gas utility firms have once again requested the government to increase gas price as well.
The government is bound to increase prices under stringent conditions of the International Monetary Fund’s (IMF) loan programme worth $6 billion.
Accordingly, the average inflation reading has remained high at over 8% on an average in the first eight months (Jul-Feb) of current fiscal year against the government target of 6.1% for the year.
The average reading may end up somewhere 9% for the full year.
“During the meeting, avenues were explored for rationalising port charges in comparison to regional ports. All the stakeholders may have to reduce charges for the realisation of ultimate port charges rationalisation. It would become possible only when the available circumstances are examined in both the ports and shipping sectors equally,” Karachi Port Trust (KPT) said in a press statement.
The meeting was chaired by KPT chairman who is head of the committee. Other committee members were including Port Qasim Authority (PQA) chairman, Pakistan National Shipping Corporation (PNSC) chairman and Pakistan International Container Terminal (PICT) CEO Khurram Aziz.
Rajpar said they would now gather the related data and information to make analysis as to how and from which heads the port charges may be rationalised.
He said the committee may meet two to three times over the next 30 days to prepare and second recommendations of the committee to the cabinet.
To recall, the international freight charges had gone up by around 500-700% since June 2020, including for traders in Pakistan. Rajpar, however, said this was a temporary phenomenon and freight charges have nothing to do with the port charges. They are two separate things.