Exercise caution in the Red Sea: A word of warning for travelers


Published on: January 16, 2024.

Filed under:

The Impact of Red Sea and Suez Canal Disruptions on Pakistan’s Trade and Port Activities

The recent surge of attacks in the Red Sea, carried out by the Houthis in Yemen with backing from Iran, poses a significant threat to global maritime transport. These attacks not only endanger the Red Sea route but also have implications for other critical waterways around the world. It is essential to address this issue promptly without escalating conflicts in the Middle East, as it has the potential to disrupt worldwide trade and prosperity.

The Red Sea and Suez Canal play a vital role in international shipping, with approximately 20 percent of global container volumes, 10 percent of seaborne trade, and eight to 10 percent of seaborne energy passing through these routes. However, recent disruptions have led major container-shipping companies to suspend operations, and even energy giant BP has halted oil shipments through this route.

The impact of these disruptions goes beyond the immediate consequences for global trade. Pakistan, being highly dependent on imports through maritime routes, is particularly vulnerable to any hindrance in the smooth passage of ships. The country’s economy heavily relies on imported raw materials, and the ports of Karachi and Port Qasim serve as crucial gateways for imports and exports.

Any disturbances or interruptions in the Red Sea route or Suez Canal directly affect Pakistan’s trade, leading to delays in cargo shipments, increased transportation costs, and potential disruptions in the supply chain. This can have ripple effects on various industries in Pakistan, including textiles, agriculture, and manufacturing, which rely heavily on imported raw materials and components.

Businesses operating in Pakistan may also face adverse effects due to disruptions in these maritime routes. Timely imports and exports are crucial for maintaining efficient operations and profitability. Delays or uncertainties caused by disruptions in the Red Sea can hamper business efficiency and lead to higher operational expenses and possible price hikes for consumers.

Pakistani ports, particularly Karachi Port and Port Qasim, might experience slowdowns or complications in their operations. If shipping lines choose to reroute vessels away from the disrupted Red Sea route, Pakistani ports could see reduced traffic, impacting port revenues and overall port-related activities.

Companies heavily reliant on ports and shipping, such as Maersk Pakistan, may face significant challenges due to delayed or rerouted shipments, increased operational costs, and uncertain delivery timelines. Local industries, including textiles, would also be affected by disruptions in shipping schedules, leading to production slowdowns and increased costs.

Exporters of commodities such as rice, fruits, and leather goods may struggle to access international markets due to delayed or interrupted shipping routes, negatively impacting their competitiveness and market share. Karachi Port Trust and Port Qasim Authority could experience decreased port activity and revenue if shipping lines opt for alternative routes, further affecting their operations and financial stability.

It is vital for Pakistan to implement strategic planning and proactive measures to mitigate potential disruptions caused by disturbances in these critical maritime passages. Otherwise, the country will face logistical challenges, increased costs, and operational hurdles for cargo companies, local industries, exporters, and port authorities. The overall trade and economic landscape of Pakistan will be significantly impacted.

Source: Dawn