SHIPPING INDUSTRY CONFRONTING MANIFOLD PROBLEMS
"There will be no flagship carriers in the years to come unless measures are taken to encourage investment in the private sector."
May 28 - Jun 03, 2007
Years of neglect, absence of long-term policies, poor infrastructure, imposition of war risk surcharge and the non-implementation of policies which were ever devised, have taken a heavy toll on the local shipping industry. No fresh tonnage has been inducted in the PNSC during the last two decades with the result that today its fleet comprises vessels which on an average are over 20 years old, costing it more and more money in repairs and maintenance to keep them running, said Mr. Tahir Malik, Chairman/ CEO of Trafco Logistics (Pvt.) Limited while talking to PAGE.
In addition, the imposition of stricter maritime security codes poses a major challenge to the sole shipping company of Pakistan - the PNSC. Having a fleet of aging vessels, with most of them in dilapidated condition, it is apprehended that there will be no flagship carriers in the years to come unless measures are taken to encourage investment in the private sector, he added.
Tahir Malik who is also Vice-Chairman of Federation of Pakistan Chambers of Commerce & Industry's (FPCCI's) Standing Committee on Aviation, stated that war is over in Afghanistan since long but war risk surcharge is still being charged from exporters. He was of the view that this surcharge is a great injustice with the exporters because it is an undue burden on exporters. Highlighting the problems being faced by exporters with regard to ports and shipping, he stated that poor infrastructure at dry ports, load-shedding and lack of proper facilities are some of the major problems confronting the exporters. Although CBR has taken various initiatives for prompt customs clearance, load-shedding is causing delay in the shipment of consignments. Apart from this, there is a shortage of manpower at ports, which needs to be addressed.
The stakeholders have called for exploiting the real potential to make shipping the backbone of the economy not only to save enormous foreign exchange but also to ensure smooth flow of seaborne trade, which only a dedicated national merchant marine could do in times of peace or war.
According to Tahir Malik, the office of Ports and Shipping Wing was established in 1961 to bring the decision making closer to the shipping industry, which is mainly based in Karachi. The main functions involved are:
1. Shipping industry is to be provided with guidance and policy decisions based on international conventions and national rules & regulations. This wing formulates such policies under the said rules for the industry.
2. Tackling of shipping-related issues on the spot and to give timely decisions for overall benefit of the sector.
3. Registration of ships and crafts under Pakistan flag and conducting survey/inspection and issuing required trading certificates.
4. To act as safety administration and ensuring seaworthiness of ships and crafts in accordance with national and international laws/conventions.
5. Pollution control from ships in harbour and territorial waters.
6. Seafaring is a specialized profession and requires proper training followed by examination and certification to be in line with acceptable international standards. The wing is entrusted to undertake this business to ensure compatibility with existing system of other maritime nations.
7. Seaman Service Book (SSB), formerly known as Continuous Discharge Certificate (CDC), is a pre-requisite document for ship-board employment. Its issuance is one of the functions undertaken by this wing through its sub-ordinate office.
8. The autonomous bodies and the field offices which deal with the shipping industry are placed under the administrative control of this wing.
9. The wing is also entrusted with the responsibility to prepare developmental plans to affect improvement in maritime sector in consonance with the international requirement and technological changes in the field.
10. International conventions pertaining to ports and shipping are initially examined by this wing and then recommended for ratification by the Government of Pakistan after reviewing the existing system in the country.
11. As a follow up to ratification of conventions, the wing is responsible for formulation of maritime laws/regulations for implementation by shipping industry.
12. The wing is also required to update and advise the government on technical matters related to maritime field. Coordination and liaison with other ministries, agencies, national and international organizations on maritime affairs is also one of the functions undertaken by this wing.
Giving background, Tahir stated that in 1947 Pakistan inherited a fleet of four privately owned cargo ships. In 1963, the National Shipping Ordinance was promulgated and National Shipping Corporation (NSC) was established which procured its first used ship, m.v. Rupsa in 1965. The national fleet comprised some 53 vessels, which were owned by 10 private shipping companies. The national fleet strength grew to a record 71 vessels just prior to the separation of East Pakistan and its emergence as Bangladesh in 1971. The fleet strength declined to 57 vessels after the separation.
In 1974, nine private shipping companies, which had 26 ships, were nationalized. The national fleet strength increased to 51 vessels, including 26 with the nine nationalized companies plus 25 ships with the state-owned NSC. In 1977, 14 ships were inducted in the PSC during the fifth five-year plan. Two years later, NSC and PSC were merged to form the Pakistan National Shipping Corporation (PNSC) which remains the sole state-owned shipping corporation. The total fleet strength increased to 60 ships with the induction of 14 vessels in late 1970s and early 1980s.
Today, PNSC's entire fleet comprises over 15 ships - 12 break-bulk vessels and three used container vessels purchased in 1996. Pakistan Tanker Company, a subsidiary of PNSC, also has a single tanker for crude oil imports. PNSC enjoyed a complete monopoly till early 1990s when the shipping sector was deregulated by the then Nawaz Sharif government. Even the opening of the shipping sector to the private sector has failed to achieve the desired results of helping induct more tonnage as Tristar Shipping, which started operations in 1992, went out business. Tristar owned cargo ships the combined capacity of which added up to 310,000 DWT.
The chief executive and one of the directors of Tristar, Masood Tariq Baghpatee and Mansoor Khalid Baghpatee were arrested on the charges of defrauding the Allied Bank of Pakistan of $ 10.85 million as they did not pay back loans totaling Rs 440 million for the purchase of five vessels in 1994-95.
PNSC's aging fleet is carrying just about 5 per cent of the national seaborne cargo while the rest is shared by the foreign shippers which cost the country over $ 3 billion annually. While the freight rates have remained constant over the last few years, not withholding the present low globally, the successive devaluation of Pakistani currency nevertheless has put a tremendous strain on the national economy to cater to its seaborne trade needs, which makes it a second top expenditure after Defence, he added.
Karachi, which is a banking and financial capital of the country, has also distinction in the country's economy due to having the Port of Karachi and Port Qasim which are the two main seaports of the country. Sea fright charges from Pakistan are higher as compared to the neighboring countries. This affects export, as high freight cost affects prices. The exporters demand that the government should consider bringing down freight charges by negotiating with the shipping lines or subsidizing the charges.
According to sources in CBR, Prime Minister Shaukat Aziz had formed a task force on National Trade Corridor (NTC) Development.
A Trade Facilitation Committee under National Trade Corridor Improvement Project (NTCIP) was formed with the broad mandate of rationalizing port charges and dwell time. Major trade facilitation measures -- reduction in clearance time/ dwell time, developing freight forwarding, shipping, warehousing & dry ports development, cold chain improvement, modernizing trade & transport logistics practices, developing a trade facilitation strategy, implementing care (customs administrative reforms), faster and accelerating customs reforms, simplification of ports procedures, reduction in dwell time with concerted efforts of all stake holders, development of freight forwarding (FF), insurance, banking in support of trade logistics revamping / modernizing other trade organizations (such as FPCCI), publicizing efforts of trade facilitation in the forums of WTO, SAFTA and ECO -- were the main objectives of TFC, the sources said. According to them, a multi agency modern transit terminal has been constructed at Jamrud (near Peshawar) for effective, speedy and smooth clearance of transit cargo.
PHDEB hired consultants for three pre-feasibility studies for the improvement of cool food chain facilities. Feasibility studies have been completed and sent to the Ministry of Commerce. PC-1s are being drafted accordingly. The wet charges at the ports reduced significantly by 15% to make our ports competitive resulting in the reduction of the cost of doing business, the sources pointed out. Maximum facilitation for customs clearance and transportation of Afghan Transit Cargo have been ensured while the plans for infrastructure development, refurbishment of customs offices for PACCS roll out have been finalized. The free time at ports reduced from 7 days to 5 days, resulting in reduction of choking of ports and effective inventory management by the trade, the sources added. Development of Pakistan Automated Commercial Community system by CBR as a virtual trade platform and clearance system connects all stakeholders in a paperless environment, the sources concluded.
BARWIL IN 'PAKISTAN'
Barwil Shipping (Private) Limited, Barwilís Pakistan Area office was established at port city of Karachi in July ë1999.
The office represent a Joint-Venture between Barwil Agencies ASA - Norway and Associated Liner Agencies (Private) Limited - Pakistan.
ALA, the local partners have operated as Shipping Agents in Pakistan for the last two decades and rejoice in cordial relationship with Port Officials, Trading Houses, Government Offices and the Business Community in Pakistan.
The joint venture is focusing on improving vessel operating efficiencies with Global capabilities and Local expertise.