VP FPCCI suggests improvement in general awareness, absence of right policies and counterproductive

Vice President of Federation of Pakistan Chambers of Commerce and Industry (FPCCI),Tariq Halim has said that  Lack of general awareness, absence of right policies and counterproductive are the impediments to maritime sector that need to be addressed.

He said that Pakistan’s maritime, seaboard and logistic sectors have enormous potential to earn for the country. However, these sectors have not been harnessed and need the Government’s focus, he added.

He said that even a single rupee of extra cost at the ports trickles down to our masses, if a rupee is saved that saving also trickles down to the masses. We need to bring down the cost of doing business and improve our efficiency at all the ports of Pakistan.

He said that Pakistan need to improve the turnaround time of the ships calling at Karachi port.

He said that free movement of transport is essential for quick discharging / loading of cargoes, for this backup area at the berths is extremely important.

  One of the reasons for low performance is extreme shortage of space at Karachi Port, which is very surprising, considering that Karachi Port is one of the biggest land owners of Karachi City, he added.

Due to lower cargo volumes, Karachi Dock Labour Board(KDLB) is now running at a loss. It is anticipated that by June 2019 the losses will be more then Rs. 1.5 Billion. This issue needs to be addressed on a war footing.

Referring to  seed cargoes , he said this sector  need to be better facilitated at Karachi Port : for this SILOS need to be built within the port (About 7 acres backup area is required). Seed cargoes are second option for Karachi Port therefore terminal with huge capital cost and very low utilization is not required.

 Fertilizer Cargoes : More backup area is required to expedite quick turnaround of the ships. Terminal is not required since the importers of the cargo prefer the present method of bagging directly from the ship. Elevated Expressway Project : is pending for a long time. It needs to be immediately implemented so that all trucks stop moving through Karachi City. 1300 Acres of KPT Land .

 The project which is termed as the Cargo Village has been pending in KPT since the last more than 10 years. The area of land at the western backwaters is about 1300 acres (quite a bit of this area is under water but can be easily reclaimed). Instead of a cargo village this should be declared as a industrial zone.

 Since this area is right next to the port therefore it would have tremendous advantage specially lower transport costs for export related industries. This will result in reducing the “cost of doing business” and promoting the “ease of doing business”.

Liquid Cargoes : Ships carrying liquid cargoes are continuously incurring demurrage. We had suggested some time ago that tenders should be announced for a chemical terminal on BOT basis (this can be established in about 6 months) at an available area at berth no. 17, at the East Wharf.

The ships carrying chemicals can be berthed here. – When the undersigned was Trustee during 2016-17 this was moved by me, we believe that the paperwork has mostly been done and it now needs only to be advertised. – Chemicals in bulk are also being imported in small ship loads, of about 3,000-4,000 metric tons each. Last month during November 2018 one of these chemical ships incurred more than US$ 200,000/- in demurrage (for 4,000 MT of cargo), due to congestion at Karachi Port. This means that the importers had to pay about US$ 50/- per ton extra for their cargo.

These days, there are quite a few cases like this. Oil Piers : OP-1 is in terrible condition with fear of the berth collapsing at any time. OP-2 is also not in prime condition. OP-3 has been closed for shipping since the last more than 4 months and way forward about repairs is still unclear.

Coal :

He said FPCCI  members of the cement industry are facing rising costs, and one of the contributing factors to this extra cost is that coal is now being exclusively handled at Port Qasim.

The importers are paying higher costs for discharging and whenever there is a rush of ships they are also facing demurrage. It is pertinent to mention that already a price increase of about Rs. 35/- per bag has occurred due to shifting of coal ships to Port Qasim.

KPT, according to reliable sources is heading for a financial crises, and every ton of cargo is important to KPT, especially volume cargoes like coal.

The loss of revenue, due to coal being shifted to Port Qasim, has resulted in an average loss to KPT of about Rs. 0.8 to 1 billion per annum. a) Wharfage is received by KPT @ Rs. 44/- per ton, weighment charges @ Rs. 11/- per ton, which means that KPT loses about Rs. 400 million per year under this head. b) In terms of port charges, the KPT could lose about Rs. 540 million in revenue, which would mean that the total loss to KPT per year would be nearly Rs. 1 billion.

  1. c) In lieu of cess, KDLB would loss about Rs. 225 million per year, and on top of that, wages paid to KDLB workers, in terms of handling coal, were about Rs. 250 million per year. – KDLB is expected to have a loss of more than Rs. 1.5 billion by June 2019. d) Apart from all above the stevedores and their staff working at Karachi Port are facing hardship. It should be noted that coal used to contribute about 27 percent of the total cargo at KPT.

Extra costs are being incurred due to sudden imposition of harsh conditions for handling of clinker at the port and not giving sufficient space for buffer stock. This has also resulted in cancellation of export contracts.

The Port Authorities must understand that the government of Pakistan is trying to increase exports. Instead of assisting / facilitating exports, they are hampering exports. Pakistan needs every single Dollar today.

Scrap : Karachi Port Trust has arbitrarily started charging demurrage after 30 days of storage charges which has resulted in importers not being able to bring scrap in shiploads (it is always cheaper to move volume cargo in shiploads).

Therefore cost of import of Scrap has increased (more USD going out of the country). KPT has also lost this business. KPT should understand that it is the port’s function to attract cargoes and facilitate them with proper infrastructure etc. as required.

 Port operations on a daily basis need to be monitored and improved. Mechanization should be done BUT keeping in mind the ground realities and the “cost of doing business”. KPT needs to reinvent the wheel and either attract cargoes or look at other means to salvage their losses.

 Presently there are 2 LNG terminals working at Port Qasim and 8 LNG ships are being handled per month. When a LNG ship is either berthing or sailing, the channel has to be closed for safety reasons.

Therefore the present channel needs to be either widened and deepened & passing bays should be made or another suitable channel should be made otherwise all shipping will be effected at Port Qasim.

If urgent remedial action is not taken then Port Qasim is heading for a severe crises situation. However we believe that Port Qasim is already working on remedial measures, we wish them the very best.

  Gwadar Port is known as the “Symbol of Prosperity”. We see Gwadar as a “FUTURE JEWEL” in the Pakistan and China CPEC flagship of China’s “One Belt One Road” initiative to build a new silk road of land and maritime trade routes across Asia and beyond.

We are positive that  Gwadar port will be a major transshipment hub and a mega port.

He said  that the Federation of FPCCI with China Overseas Ports Holding Company (COPHC) has been working for sometime to ensure commencement of regular cargo shipments at Gwadar Port so that we can send a message to the comity of nations that Gwadar Port is a fully operational, fully functional vibrant port.

FPCCI has also signed a MOU with M/s. COPHC in this regard. We have been assured by China Overseas Ports Holding Company (COPHC) that they will be providing special rates / benefits & services not only for all cargoes but also special benefits for Afghan Transit cargoes.

Therefore apart from other cargoes, the first priority is now to immediately attract Afghan Transit cargoes at Gwadar Port and also to promote transit of Fertilizer for Afghanistan via Gwadar Port.

 By getting concessions / benefits for Afghan Transit cargoes from China Overseas Ports Holding Company (COPHC), FPCCI / COPHC will also be acting as a bridge for better relations between Pakistan and Afghanistan.

E said that FPCCI members are keen to invest and setup projects at Gwadar. They also feel that sufficient and correct information about projects, prospects is not available therefore FPCCI office at Gwadar is now established.

We shall  be taking a high powered delegation consisting of industrialists and bankers to Gwadar in the very near future. It is also pertinent to mention here that Gwadar has great potential for the development of Tourism because of its azure water, attractive white sandy beaches, temperate climate and friendly people. Plus  Gwadar is free of crime.

 During winter cruise ships from Europe move towards the gulf region mostly to UAE ports on a seven day cruise, Hence Gwadar can be developed to provide an alternate destination which would boost the tourism industry. FPCCI in cooperation with COPHC is already making efforts to attract cruise ships to Gwadar and Inshallah we shall have some good news for you very soon. We believe that the issue of amendments in SROs related to Gwadar Export Processing Zone has finally being resolved. We hope for official notification soon. Weboc team is presently in Gwadar therefore we expect now that Weboc will finally be operational very soon at Gwadar

Referring to PNSC , he said  PNSC needs to revisit its strategy i.e. stop relying on right of first refusal. They need to be able to compete in the open market.

 We are confident that once PNSC sharpen its outlook / becomes competitive then all Pakistani traders will support them. Millions of tons of coal, fertilizer, Seeds etc. can be PNSC’s captive cargoes subject to competitive freight rates and performance.

PNSC should also look into setting up a container line which is the need of all our importers and exporters.

  Costal Shipping : With Gwadar Port coming-up there is a requirement of coastal shipping. However, there is no culture of shipping between Pakistani ports. It, in fact, died after dismemberment of East Pakistan.

Pakistan  need to revive it, by easing on regulations, procedures, customs and port charges so that inter-Pakistan sea transportation can commence soonest.

Referring Ship Building, he said  ship building also needs incentives like exemption from duties, free land etc; and regulations that should promote construction of vessels in Pakistan. It is heartening to note that the Prime Minister has given approval for the establishment of a ship breaking yard at Gwadar.

 Inland Water Transport and Flood Management ,he  said it is a historical fact that during the British Raj in 1800’s, the British troops moved from Karachi to Khyber by the Inland Waterways on boats.

 It is only after the start of railway that this practice stopped. When you re-commission your inland waterways then automatically flood management is done and wastage of water is curtailed.

FPCCI Standing Committee on Inland Water Transport & Flood Management has made out a working paper and it will be presenting this to the  Prime Minister of Pakistan sometime during February 2019

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