Shippers using the Pakistani Port of Karachi are facing massive detention charges on cargo that they cannot move out of the port as a result of the Covid-19 pandemic with some cargo owners facing bills of hundreds of thousands of dollars.
One incensed cargo owner told Container News that the shipping lines were “thieves and looters” as he had run up a bill in excess of US$200,000 in detention charges since the pandemic began.
In Pakistan, the problems began when the border with landlocked Afghanistan was closed to prevent the spread of Covid-19, but it also prevented the movement of transhipment cargo from the Port of Karachi.
Shippers in other regions have been increasingly unhappy about the charges for liner services as the shipping lines’ offering during the pandemic has deteriorated, but the charges in Karachi amount to profiteering of the worst kind, with shippers in Pakistan and Afghanistan, in particular, affected, according to Mohammed Tahir, managing director of freight forwarder Five Star logistics in Pakistan.
Shipping lines that have continued to levy detention charges in Karachi throughout the pandemic include COSCO, OOCL, HMM, APL, Maersk and KMTC, among others. Container News has written to these lines for comment, but of six lines contacted only HMM has responded so far.
HMM told Container News that it regrets the difficulties that its customers are having, “Lockdown and movement restriction led by Covid-19 pandemic have caused negative impacts on logistics flows with generating unexpected costs including detention, storage, local charges etc.
“I believe there are growing concerns between customers and liners over the course of negotiations for how to handle such outstanding amounts while long-idling cargoes have increased for [sic] recent months.”
In its response HMM said that it has negotiated with its customers in an effort to manage the situation. The spokesman added, “This is a very unfortunate situation. Every stakeholder including HMM will be required to do its utmost to make significant headway for seeking a better solution and at the same time withstanding the crisis. We are ready to talk.”
But an angry Tahir estimated that “Since March, these few companies [the shipping lines] have charged Afghan and other traders more than US$20 million.”
According to the forwarder he offered to buy the containers from the lines, but they refused to sell them, preferring instead to make the detention charges of around US$120-140/day for each container. Invoices for these charges have been seen by Container News.
The offer to buy the containers was a last-ditch attempt to reduce the costs for what are low value cargoes of stock fabric, with a container load worth around US$120,000. As a result of these charges Five Star Logistics has been brought “near to bankruptcy,” said Tahir.
HMM responded to the question of the sale of containers, saying, “There might be a lot of cases on this matter. For example, outstanding amount needs to be guaranteed before containers are sold. What is more, particularly in Pakistan, there was a report from our local agency that the transfer of ownership for containers were prohibited by Pakistan customs authority due to high risk of illegal use on a border area.
“We are under obligation to observe the local rules, otherwise heavy penalties will be imposed.”
Other countries, such as India, have ordered the lines to cut detention charges during the period of the pandemic, but in Pakistan the government of former cricketer Imran Khan, who is the current prime minister, has political issues with the Afghan Government and with the transhipment cargo delayed in Karachi it is viewed as a method of applying pressure on Karbul, according to Tahir.
In HMM’s final response the spokesman pointed out that the company must comply with local regulations and guidelines.
He concluded, “HMM is fully aware of the severe setbacks our customers are experiencing as well as the importance of making logistics flow back to normal within the limit of what we can afford. In this context, HMM has been highly co-operative for not only discount/waiver of demurrage/detention but also free time extension since March 2020.”
According to HMM the carrier has discounted 50% of the detention charges in Pakistan for the past three months, as well as extending the free time.
“We will keep doing the same policy in the weeks to come as part of mutual co-operation. We have been successful to reach an agreement with customers in most cases.”