LONDON, Oct 29: Shipping lines said on Monday they had slashed by 20 per cent war surcharges they had slapped on cargoes to Pakistan, which have been crippling the country’s trade flows and helped push the economy to the brink of crisis.

“The surcharge used to be $185 in total per container, but now it’s down to $149,” a spokesman for the India Pakistan Bangladesh Ceylon Conferences (IPBCC) told Reuters. Since the United States started attacks on Afghanistan, Pakistan’s export industry has been struggling with soaring freight and insurance costs, as underwriters reassess the risk to ships docking in the region.

The IPBCC, which is comprised of 14 major shipping lines including P&O Nedlloyd and Denmark’s A.P. Moeller, said the move followed “substantial efforts... in discussions with their insurance underwriters”.

Insurers cancelled all shipping war-risk cover, which includes cover for terrorist damage, the week after the September 11 attacks, only reinstating it on a case by case basis in return for sharply higher premiums.

Pakistan’s central bank said on Monday that the country’s decision to back the US-led war on global terrorism would in the short term raise freight and insurance charges and disrupt trade flows.

An IPBCC press release said the cuts to surcharges would be effective from Tuesday (today).

Pakistan’s central bank said its “frontline status” could hurt the country by shoving GDP growth down into the range of 2.50-3.75 per cent in the 2001/02 period, compared to a target of 4.0 per cent.

Shipping sources likened the cuts to those negotiated with London insurers by the Sri Lankan government, after severe war risk surcharges were imposed on shipping in the wake of a devastating Tamil Tiger attack on Colombo airport in July.

Countries perceived by insurers as high-risk have been hit hard by the recent round of war-risk hikes. Iraq said earlier this month that war-risk insurance charges had dented its oil sales by making shipment too costly.—Reuters