Ocean Carriers Levy Surcharges, Cut Pakistan Port Calls Amid India Trade Embargo
Although Pakistan and India agreed to a ceasefire Saturday, restrictions to port access in both countries are making container shipping companies rethink their approach to docking at Pakistani ports.
Ocean carrier giants Mediterranean Shipping Company (MSC) and Hapag-Lloyd followed the lead of CMA CGM in implementing new surcharges on cargo to and from Pakistan.
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And beyond that, multiple shipping liners are scrapping calls to Pakistan's ports or adjusting their routes in the region to adapt to the scenario.
As major shipping lines mostly leave the Pakistani ports out of their direct service routes, importers and exporters in the country are growing concerned over container congestion at the port.
Exporters are worried that they won't be able to meet their shipping deadlines as fewer ships come to pick up cargo. This leads to longer lead times and likely extra costs. And for importers, cargo collection entering Pakistan has been slow since the start of May due to the backlog.
MSC, the world's largest container shipping company, announced emergency operation surcharges for Pakistan-related shipments. The fine will be $800 per container headed to the U.S., Europe and Africa, and $300 per container to and from the Middle East Gulf and Indian subcontinent.
Until further notice, the fee will be effective on the gate-in date of May 19 for shipments to Europe, Africa and the Middle East/Indian subcontinent. Shipments to the U.S. will be effective June 11.
Rival Hapag-Lloyd is implementing its own contingency surcharges for shipments between Pakistan and Europe and Africa. The surcharges for containers out of Pakistan will be $500, while the fees for cargo entering the country will be $300. Fees will go into effect May 21.
The company is also implementing a $1,500 per container general rate increase/adjustment for goods exiting select ports in India to the U.S. East Coast, as well as cargo headed from Pakistan to the U.S. and Canada.
Both Pakistan and India have effectively halted trade with one another in the wake of a terrorist attack in Kashmir last month that resulted in military escalations from both sides.
As part of the trade embargo, the south Asian nations have banned the import of goods from—or transiting through—the other country into their own ports in the wake of the rising tensions.
But under the rules imposed, carriers looking to make direct calls at Pakistan's Port of Karachi or Port Qasim will not be able to do so, because their cargo would be turned away from Indian ports, including major container hubs like Mundra and Nhava Sheva.
According to the Pakistan Ship's Agents Association, most large container ships visiting Pakistan carry up to 70 percent Indian goods, thus making the Indian ports more of a priority.
'Overall, the pattern emerging is that whilst India retains their direct network connectivity to overseas ports, Pakistan's connectivity is becoming reduced as basically a large amount of cargo now has to be transshipped,' said Lars Jensen, CEO of Vespucci Maritime, in a daily LinkedIn updated Tuesday. 'The India/Pakistan conflict therefore has the consequence of negatively impacting Pakistani supply chains much more than Indian supply chains.'
As an alternative, vessels are instead redirecting to transshipment hubs like Colombo Port in Sri Lanka, the Port of Singapore, Malaysia's Port Kelang, the Port of Salalah in Oman and the UAE's Jebel Ali Port.
Most of the major container liners have shifted some form of their service operations due to the suspension of trade between the countries.
MSC launched a direct weekly feeder service from Pakistan to Colombo to transport export containers to Sri Lanka for connections to global destinations.
CMA CGM revised five of its service lines, removing Karachi port calls from three services to Europe, the Mediterranean and intra-Asia. Port Qasim was removed from the Indamex route, which travels between India and the U.S. East Coast. These routes will instead use transshipment hubs in Colombo and another UAE-based gateway, Khalifa Port, to connect Pakistani cargo to the rest of the world.
The ocean carrier is supplementing Pakistani cargo by adding Port Qasim to its Pakistan Khalifa Express (PIKEX) service it launched in April.
Hapag-Lloyd is deploying a dedicated shuttle, the Sofia Express, between the ports of Salalah and Karachi, with Port Qasim also included in the rotation. This is the second feeder option for Pakistani transshipment cargo, complementing the Pakistan Shuttle Service operating between Karachi and Salalah.
HMM has switched two of its services so that they will call Indian ports first, before calling at Pakistani ports.
Cosco Shipping and subsidiary Orient Overseas Container Line (OOCL) have stopped bookings to Karachi, with the former's ships being redirected to Port Kelang instead.
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