Terminal operators refuse to extend waiver from detention, demurrage charges: KCCI

Terminal operators refuse to extend waiver from detention, demurrage charges: KCCI

KARACHI: Terminal operators have refuse to extend waiver from demurrage and detention charges despite clear instruction of the government to facilitate the trade in the wake of COVID-19.

The terminals are demanding hefty amounts of demurrage charges from importers before delivery of cargo which has remained blocked at terminals, said a statement issued by Karachi Chamber of Commerce and Industry (KCCI) on Wednesday.

Thousands of containers and LCL cargo have accumulated at these terminals because importers are unable to bear the heavy demurrage and detention charges accrued on delay in clearance of containers and inability of importers to take delivery due to lockdowns and shortage of goods transport.

Total shut down of industries and suspension of trading activities, have affected entire supply chain and importers are unable to supply their goods to factories and wholesale markets, resulting in a liquidity crunch. Many importers are unable retire their import documents from banks due to shortage of funds.

In total defiance of the directives of Ministry of Maritime Affairs and approval by the Federal Cabinet to allow 15 days free storage to importers for all cargo imported between 25th March and 30th April 2020, the terminal operators have refused to allow additional 10 days of free storage over and above the regular free time of 5 days.

The Karachi Port Trust, Ministry of Maritime Affairs and the cabinet have approved the free time for 15 days, in order to alleviate the sufferings of importers who are already hit hard by massive losses in all imported cargo due to a steep fall in prices of commodities and raw materials triggered by a sharp decline in global demand. Since early March 2020, KCCI has been persistently demanding much needed relief for importers fearing that longer the cargo remains at port, more it is likely to lead to bankruptcies.

The Karachi Chamber took up the issue of heavy demurrage and detention charges due to lockdowns with all concerned authorities including the Minister of Maritime Affairs Ali Zaidi, Federal Board of Revenue (FBR) and Karachi Port Trust, to provide relief to the importers due to the unprecedented situation caused by Covid-19.

Considering the urgency of the issue, the Board of Trustees of KPT passed a resolution No.340, to allow waiver of demurrage and extension of free time for import cargo landing between 25th March and 30th April 2020 at all terminals in its jurisdiction. The resolution was submitted to Federal Cabinet for approval through Ministry of Maritime Affairs, which was approved on 14th April 2020, with the directives to extend free time from 5 days to 15 days for all import cargo at Karachi Port.

Ministry of Maritime Affairs notified the approval of Resolution 340 of the Board of Trustees-KPT by the Federal Cabinet, through its letter dated 20th April 2020, and directed to take necessary action to grant extension of Free Period to 15 days from regular 5 days and waiver of demurrage on all import containers and LCL cargo landing at Karachi Port including all Private Terminals. In pursuance of the cabinet approval, KPT has also issued a letter dated 22.04.2020 directing all port user’s associations for extension of Free time for 15 days for all FCL/LCL cargo landing from 25.03.2020 to 30.04.2020, which now has to be extended further till 31st May’2020.

Despite clear instructions from concerned authorities, the private Terminal Operators have refused to allow free time and waiver of demurrage for 15 days, in total disregard and defiance of the directives of Ministry of Maritime Affairs, Federal Cabinet and the KPT.

Consequently, many importers have not been able to take delivery of containers and LCL cargo within stipulated dates up to 30.04.2020 and the demurrage and detention charges have continued to accumulate.

In view of the defiant attitude and non-compliance of the instructions as approved by federal cabinet at a time when the entire country and particularly the business community is facing an unprecedented crisis, it appears that the Karachi Port Trust has not been able to enforce the directives of the Ministry of Maritime Affairs, Federal Cabinet and the Board of Trustees of KPT.

It seems that the Private Terminals operating at Karachi port and Port Qasim, are absolutely autonomous in imposing arbitrary charges on importers at will and have little regard for the adverse repercussions on Pakistan’s economy due to a global pandemic and financial crisis. Pakistan is a lucrative market for shipping and maritime trade, and the terminal operators have immensely benefited from this vital trade route for the last many years.

A detailed discussion was held by the KCCI team led by its President Agha Shahab Ahmed Khan on 30th April 2020 with the CEOs of all four Private Terminal Operators.

KCCI team explained to the terminal operators that now is not the time for them to negotiate and seek a quid pro quo for extending any concession to importers. It was emphasized by KCCI that the operators have been earning hefty profits from Pakistan’s trade and industry and now is the time for them to support their clients in Pakistan to minimize their losses and survive in business.

In fact it was an ethical and moral obligation on the part of terminal operators to forego some of their profits and bail out the importers.  However, unfortunately the terminal operators refused to offer any extension in free time despite the directives of highest authorities in the country and acted more like colonial era masters.

KCCI has therefore appealed to the authorities concerned to act decisively and enforce their directives to rescue the trade and industry from impending disaster due to prolonged blockage of import cargoes at Karachi Port and Port Qasim, and resolve this grave situation immediately.

At the same time, the validity to avail 15 free time for storage of containers at private terminals must be extended up to 31st May 2020 because the operators did not allow the approved free time till 30th April 2020.

Further, KCCI pleaded that the agreements signed by previous governments with Private Terminal Operators may be revisited and modify the terms to enable the government to intervene in times of natural calamities and unforeseen disasters.