Shipping companies main beneficiaries of port charges cut

KARACHI - A reduction in port charges, announced by the Karachi Port Trust and Port Qasim seem not to benefit the port business and trade as both are handling 100% captive cargo. Moreover, it will also result in lay off in overheads, the Nation learnt Monday.
It is to be noted that Pakistani ports do not handle trans-shipments, which means only that cargo, imports, comes to Pakistan which is meant for the country or required. Therefore, the reduction in port charges will only benefit shipping companies.
The port charges have been reduced twice in the past but there benefits were never felt in trade because there is no single authority in Pakistan to develop a consensus to make the charges unify which are imposed unfairly by ports, shipping lines, terminal operators, and others.
The fact is that the shipping lines are currently doing business in negative flow in a hope that one day they will have old plausible environment for shipping lines, yet Pakistani port authorities have gullibly reduced the port charges without considering their captive cargo handling status.
Singapore port has reduced its port charges about 35% in three months, so did Dubai and Colombo ports, but they are mainly dealing in trans-shipment which help them sustain and earn as well, in the time of global recession.
No doubt port charges at PQ and KPT are highest in the region, but they should be reduced, nominally, keeping all prospects in view, otherwise it will have a negative impact on trade and ports business, said former Ports and Shipping director general Capt Anwar Shah.
He elaborated that Pakistan totally depend on foreign lines for containerised export and import cargo of 1.7 mill TEUS, while the terminal operators must be regulated on the pattern of TAMP in neighbouring countries and Ministry may constitute a “Tariff authority of Port and Terminals” to regulate the tariff. The declining volumes on Asia-Europe and transpacific trades may exist till 2011, as US Trade has faded and west coast ports are facing 37% cut in volumes as dry bulk freight rates have plummeted and US Dollar has strengthened, he added.
Due to excessive supply growth, zero margins will be seen till 2010 and these trade accounts for 60-80% of revenue of most Asian container, Shipping Operators, moreover, the expected trading losses may be 5% to 50% up to 2010, and if the condition persists for next 2 or 3 years, major operators will face solvency and serious funding problems, he pointed out.