PAKISTAN’S seaports have enormous potential. But due to lack of awareness, an absence of favourable policies, and counterproductive regulations, this major source of foreign exchange earnings is in complete disarray.
There is an urgent need to improve the conditions of seaports in the country. Ports have been centres of commerce for centuries and continue to remain crucial to the economy. Every year, hundreds of billions of dollars’ worth of cargo moves through seaports.
The Karachi Port Trust (KPT), known as ‘the gateway to Pakistan’, is currently handling 54.69 tonnes (import and export) of dry/ liquid cargo and about 2.252m twenty-foot equivalent units. According to shippers these volumes are not satisfactory.
They should be much higher, but are suffering due to an extreme shortage of space at the Karachi Port. The port’s land has either been occupied by the land mafia or by various parties on weak stay orders.
Those in the shipping industry are of the view that the KPT should make arrangements for more space in the port areas so that cargo volumes could be improved and free days could be reverted to seven days initially and 10 days subsequently, instead of the present five days. Free time is calculated from the first day of availability and is based on calendar days.
There is an urgent need to improve the conditions of seaports in the country
This will bring down the cost of doing business. Due to the lack of space, shippers continue to suffer. For instance, about three million tonnes of seed cargo is presently imported in Pakistan, but importers have to pay hefty demurrage on the ships because of congestion at the ports.
Similarly, one of the importers recently had to pay $80,000 as demurrage for chemical imports. In short, ship owners have to pay around $26 per tonne extra for cargo. Needless to say, at the end of the day this extra cost trickles down to the masses.
As for Port Qasim, it has two liquefied natural gas (LNG) terminals, and eight LNG ships are handled per month. Another four terminals are planned, which would mean a total of around 30 LNG ships per month or 60 in and out movements per month.
But when an LNG ship is either berthing or sailing, the channel has to be closed for safety reasons. Therefore, the present channel needs to be both widened and deepened. Moreover, passing bays should be established otherwise all shipping activities at Port Qasim will be adversely affected.
On Aug 2, the M V Heilan Spring vessel carrying 54,960 metric tonnes of coal completed discharging within 48 hours after berthing at the Pakistan International Bulk Terminal, but wasted about 10 hours in sailing due to the closure of the channel because of LNG ships’ movement.
Therefore, urgent action is needed to save Port Qasim from heading towards a severe crisis. On the other hand, it is encouraging to note that the Gwadar Port is emerging as a symbol of prosperity and is all set to become a major trans-shipment hub and mega port.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) is working with the China Overseas Ports Holding Company (COPHC) to ensure commencement of regular cargo shipments at Gwadar Port.
The FPCCI has also signed a memorandum of understanding with the COPHC in this regard. The COPHC has assured that they will be providing special rates/ benefits and services for all cargos, including the Afghan Transit cargo.
Gwadar can be developed to provide an alternative destination for winter cruise ships from Europe that move towards the Gulf Region on luxury cruises; which would boost the tourism industry. The FPCCI is already making efforts to attract cruise ships to Gwadar.
Efficient seaports serve as the backbone of the economy in developing countries. Today, ports have become even more important than they were previously as they play a significant role for an economy in transition, such as that of Pakistan.
Published in Dawn, The Business and Finance Weekly, September 10th, 2018