Pakistani Exporters Worry About EU and US Shipments Amidst Heat in the Red Sea


Published on: January 18, 2024.

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The recent disruptions in the Red Sea due to maritime attacks by Yemen’s Iran-aligned Houthis have had a significant impact on Pakistan’s export shipments to Europe and the US. This article will explore the consequences of the trade disruption on different sectors, such as perishables, textiles, and rice, and highlight the challenges faced by exporters. It will also discuss the future prospects for the rice export industry in Pakistan.

The perishable sector, particularly fruits and vegetables, has been severely affected by the change in shipping routes. Pakistan’s export of mandarins (Kinnows) to Europe has been significantly impacted by the increased travel distance caused by the detour via the Cape of Good Hope. Exporters are concerned about the quality of the fruits due to the longer travel time, and there is a possibility that exporters may opt out of exporting if the situation continues.

In addition to fruits and vegetables, textile and rice shipments are also facing challenges due to the trade disruption. The Rice Exporters Association of Pakistan (REAP) has reported that exporters are incurring losses as freight charges have increased by 140% after the logistical nightmare. Rice is a major export of Pakistan, mainly to East Africa and Europe, and the increase in freight charges has put additional pressure on the industry. Despite these challenges, the REAP remains optimistic about achieving a $3 billion export mark for rice in the ongoing fiscal year.

The disruptions in the Red Sea have not only affected specific export sectors but have also impacted ocean trade as a whole. Longer voyages and increased ship speeds to reduce delays have led to a significant increase in fuel costs, costing millions of dollars each month. The rates on Asia-Europe and Asia-Mediterranean routes have increased by over 200% since the Red Sea crisis began, leading to delays and a shortage of equipment. This shortage of equipment has resulted in increased spot rates and will spread to all export trades out of Asia, not just those going around Africa.

The trade disruptions in the Red Sea have had far-reaching consequences for Pakistan’s export industry. While the perishable, textile, and rice sectors have been severely affected, exporters remain hopeful for a positive future. However, the challenges of increased freight charges, longer transit times, and rising fuel costs need to be addressed to sustain the growth of the export industry. Despite these obstacles, Pakistan’s export market continues to hold significant potential, particularly in Europe and the US.

Source: Business Recorder