KARACHI: In an already tough business environment, exporters and importers are facing another challenge due to increase in stevedoring and cargo handling charges at Karachi Gateway Terminal Limited (KGTL). In some cases the charges are nearly twice the old rates.

They believe that charges have been raised without making any investment at the terminal. As a result, exports will become uncompetitive while costly imports will fuel food inflation.

A cement maker said many exporters based in the country’s south have suspended their March plans for clinker till the matter is resolved. He added that stevedoring charges are almost double at the terminal.

Mohammad Ali Tabba, Chairman of the All Pakistan Cement Manufacturers Association (APCMA), informed KGTL CEO Khurram Aziz Khan that recent collaboration between KGTL and Karachi Port Trust (KPT) had presented unprecedented challenges for cement exporters who are facing increased stevedoring and cargo handling charges at KGTL for export of clinker, which being a very low margin product plays a vital role in sustaining the operational efficiency and cost dynamics of the cement industry besides maintaining the industry’s capacity utilisation and ensuring the balance of cost burdens on the prices of cement in the domestic market.

Clinker exports bring in significant foreign currency and help offset, to some extent, the outflow of forex needed to import essential commodities like coal, Tabba said.

He said any increase in FOB charges following a jump in cost of handling clinker at KGTL could have severe repercussions, rendering clinker exports unviable.

“There should be no change in stevedoring charges or any other FOB-related levy at KGTL until June 30 to safeguard competitiveness of clinker exports,” he suggested.

The KGTL may consider charging a reasonable amount of royalty from stevedores operating at the port. The amount of this royalty should be determined with an understanding that any increase in FOB for clinker exports is untenable, Mohammad Ali Tabba said.

“If KGTL intends to engage in stevedoring operations, it should align its rates with those being charged by stevedores. The KGTL should swiftly include all stevedores on its panel to ensure seamless operations,” the APCMA chief said.

He said the cement industry was ready to explore the feasibility of shifting bulk cement exports from Port Qasim to KGTL to mitigate potential challenges arising from transportation and loading rates.

Currently, Mr Tabba added, the average loading rate of clinker at KPT stands at Rs10,000 per tonne a day, which is below the global average of Rs20,000 on berths equipped with necessary infrastructure. “The APCMA is willing to support KGTL in revising tariff rates if sufficient infrastructure is provided to achieve competitive loading rates.”

The Lahore Chamber of Commerce and Industry (LCCI) has informed the ministry concerned that importers of steel coils, wire rods, round bars and other bulk commodities are angry over the rise in charges.

By taking over operations at KPT, the KGTL has raised the tariff for general cargo delivery on steel-related items from Rs50 per tonne to Rs480 per tonne.

Financial strain

Karim Aziz Malik, Chairman of Capital Office Islamabad, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), informed the Maritime Affairs Ministry that a recent joint venture between AD Ports and Keamari Terminal had led to unseen challenges for importers and exporters.

Charges of Rs480 per tonne on import of various products combined with KPT’s wharfage are creating a financial strain on businesses.

Mr Malik said the average export value of clinker per shipload is about $1.7-1.8 million based on a consignment of 55,000 tonnes per shipload and an FOB value of about $31 per tonne. Total export is three million tonnes per annum.

Even an increase of a few cents in costs could wipe out this business, which earns foreign exchange of one billion dollars per annum.

“The motive behind the government’s move to award our berths to KGTL is to provide state of the art equipment and facilities, with high value additions, to ensure that the business community makes substantial savings.

“Until facilities are provided to the business community, no extra charges should be levied,” Karim Aziz Malik said.

Published in Dawn, February 25th, 2024