Exporter seeks relief as Pakistan-US shipping costs surge 200% amid Iran war

Shipping expenses for Pakistani exporters to the United States have skyrocketed by over 200 percent on certain routes, according to Ismail Suttar, the founding chairman of the Salt Manufacturers Association of Pakistan (SMAP). This surge is attributed to the repercussions of the Iran war, which disrupts shipping lanes, hikes war-risk insurance, and elevates fuel costs.

A container shipment from Karachi to New York that used to cost around $2,000 is now quoted at $8,000 to $9,000, warned Suttar, expressing concern that these additional costs could hurt the competitiveness of Pakistani goods in the US market.

Suttar called on the government to promptly address the situation and devise an emergency strategy to alleviate the impact of rising freight charges on exporters. He noted that while shipping rates have increased globally, the jump on some Pakistan-to-US routes is significantly higher. Freight charges on the Karachi-Jebel Ali route, which once ranged from $100 to $200, have jumped to $4,000 to $5,000, with a decrease in vessel availability exacerbating the problem.

The cost disparity is particularly stark when compared to other export destinations. A container from Vietnam to New York costs around $3,000 to $4,000, whereas the same shipment from Pakistan costs $8,000 to $9,000. This creates an additional $5,000 cost burden for Pakistani exporters, putting them at a clear disadvantage when competing for international orders.

Suttar also highlighted the lack of an effective national shipping carrier and a robust containerized cargo fleet as structural weaknesses, pointing out that countries like China and Korea have national carriers that help smooth trade disruptions.

He urged the formation of an inter-ministerial committee comprising exporters, shipping companies, and relevant government agencies to assess the unprecedented rise in freight charges and devise relief measures for exporters. Failure to act swiftly, warned Suttar, could result in a decline in export orders, strain foreign exchange earnings, and diminish Pakistan's standing in international markets.

He stressed the need for a proactive approach from the government, continuously monitoring global shipping routes, freight rates, and supply chains.