Pakistan’s Export Sector Suffers Significant Blow Due to Red Sea Trade Crisis
Published on: February 4, 2024.
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Freight Charges Increase by 150% in Pakistan Amid Red Sea Trade Crisis
The recent trade crisis in the Red Sea has resulted in a significant increase of 150% in freight charges in Pakistan, thereby posing a threat to the export of crucial commodities like textiles, rice, fruits, and vegetables.
Aasim A Siddiqui, Chairman of the All Pakistan Shipping Association (APSA), revealed during a discussion with journalists that the average cost of freight has soared from $1,500 to $2,500 per container due to the maritime trade crisis on the East-West route.
Prior to the crisis, the freight charges stood at around $1,000 per container. However, with the rerouting of vessels through Africa to avoid the crisis, longer delivery times have ensued, causing a shortage of empty containers and demurrages in various countries, including Pakistan.
Siddiqui dismissed claims made by local businessmen and trade bodies, which held shipping companies accountable for the substantial increase in freight charges. He directly attributed the surge to the tension in the Red Sea. With the extended shipping route taking three weeks, compared to the previous one week via the Red Sea, the shortage of containers has ensued, leading to a consequent rise in freight charges.
The crisis has now escalated freight charges to the point of exceeding the export price of rice, thereby placing Pakistan’s second-largest export at risk. Additionally, the largest export sector, textiles, along with fruits and vegetables like mandarin (kinnow), are also facing potential threats.
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