Pakistan reportedly defers container demurrage charges

Lack of U.S. dollars to fund letters of credit has caused a backlog at Pakistani container ports.


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The government of Pakistan reportedly is working with shipping lines and their customers to ensure that shippers are not snared with demurrage charges caused by container clearance problems at ports in that nation.

Pakistan-based outlet pkrevenue.com says the government “has waived demurrage and detention charges for stuck containers at ports due to non-opening of letters of credit (LCs).” The business media outlet says the country’s Minister for Maritime Affairs made the announcement Jan. 23.

According to pkrevenue.com, an estimated 8,000 containers are stuck at Pakistani ports “after a shortage of [United States] dollars delayed the settlement of letters of credit for these containers.” The organization says the situation has “made the business community restless.”

The same minister denied rumors that shipping lines were planning to wind down their operations in Pakistan because of the problem.

The government says a decline in exports and an increase in imports is an issue tied to the wider Pakistani economy. According to pkrevenue.com, the State Bank of Pakistan is advising importers involved in the entanglement to seek to have their payment terms extended to 180 days or beyond, “or arrange funds from abroad to settle their pending import payments.”

Regarding the shortage of U.S. dollars, a recent article by the Singapore-based Business Times cites “increased spending on overseas trips” by Pakistanis after the pandemic as one cause. “The other is demand for currency from neighboring Afghanistan after the Taliban’s takeover last year.”

In terms of scrap imports from the U.S., in the first nine months of 2022, buyers in Pakistan imported 341,000 metric tons of ferrous scrap with a claimed value of $209 million. Those figures come from the U.S. Census Bureau, as aggregated by the U.S. Geological Survey (USGS).

In the same timeframe, Pakistan also bought 12,900 metric tons of aluminum scrap and about 22,400 metric tons of copper-bearing scrap from the U.S., according to the USGS.

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