Rivers bursting their banks, flash floods, and glacial lakes bursting out—Pakistan is experiencing the worst floods of this century, with at least one-third of the country under water. Floods have caused a dual humanitarian crisis of food shortages and health threats.
More than 7,000 containers stranded
Up to 7,000 containers were stranded on the road between Karachi and Chaman on the Afghan border southeast of Kandahar due to flooding.
However, shipping companies have also not waived demurrage (D&D) charges for shippers and forwarders due to the floods, which has resulted in huge costs.
Many trucks are shipping empty boxes back to carriers, but as the free rental period for the boxes ends, demurrage and demurrage (D&D) kicks in, flooding carriers’ wallets with cash.
It is estimated that Yang Ming, OOCL, HMM and other smaller shipping lines have collected as much as $14 million in demurrage and demurrage (D&D) since the floods hit in the middle of last month.
Traders said that because they hold containers that cannot be returned, they are charged fees ranging from US$130 to US$170 per container per day.
One of the traders named Tahir Achakzaim said: “So far, I have a container that has been detained for 11 days, and the demurrage fee that has been charged now reaches US$1,870. It is worth mentioning that the demurrage fee from Shanghai Shipping costs to Karachi were around $2,000. The carrier doubled my costs and their revenue.”
The trader added: “It is difficult to determine exactly how many containers were flooded and trapped and the value of the goods in these containers, so these figures are only rough estimates.”
Shippers and forwarders say they are working to keep their businesses afloat and have asked carriers to waive these fees during the flood crisis, but have received no response from shipping lines.
Pakistan’s losses may exceed US$10 billion
It is understood that floods caused by record monsoon rainfall and melting glaciers in the north have affected 33 million people in Pakistan. As of September 7, the death toll caused by floods has risen to 1,355.
Not only were there casualties, the floods also caused serious economic losses to Pakistan.
The Finance Minister of Pakistan said that the flood is expected to cause economic losses of US$10 billion to Pakistan. More than 1 million houses have been destroyed, and more than 5,000 kilometers of roads, railways, more than 200 bridges, dams and other key infrastructure have been damaged. .
After the floods, prices of agricultural products in Pakistan rose sharply, worsening inflation and prompting further tightening of monetary policy.
According to data released by the Pakistani government on September 1, the country’s consumer price index rose 27.3% year-on-year in August.
Agriculture is the pillar industry on which the country depends for its survival. As large areas of land were flooded, nearly 50% of the country’s rice, cotton, sesame, tomatoes, and peppers were destroyed, and farmers were about to miss the best sowing period for wheat.
The country’s Planning and Development Minister Ahsan Iqbal estimates that about 45% of Pakistan’s cotton production has been destroyed and that the country will have to spend $3 billion to import raw materials for its textile industry, which is Pakistan’s largest foreign exchange earner. .
At present, the country’s foreign exchange reserves only have about US$9 billion left, and a liquidity crisis is imminent. Soaring food costs and swelling import bills will put pressure on Pakistan’s economy.
A senior official from the United Nations refugee agency (UNHCR) has warned that the situation in Pakistan is likely to worsen with more rain expected in the coming month.
It is reported that many countries and international organizations around the world, including China, have provided funding or material assistance to Pakistan.
So far, China has sent multiple flights of Chinese aircraft to Pakistan to deliver humanitarian supplies for flood relief and disaster relief.
At the same time, Pakistan has also completed its assessment by the IMF and can continue to receive their allocations, which may temporarily alleviate some difficulties. I hope Pakistan will overcome this difficulty as soon as possible.
Finally, we also remind freight forwarders and cargo owners who have recently traded with Pakistan to pay attention to the local situation in a timely manner.
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