KARACHI: Karachi Port Trust (KPT) has given importers free access to its storage for two weeks to reduce the burden of their swelling demurrage due to lack of transportation amid lockouts, it was learned on Tuesday.
Maritime Affairs Minister Ali Zaidi said the decision was taken in view of the difficulties faced by businesses because of COVID-19.
“KPT will also allow companies operating terminal (TOC) to utilize the KPT storage area to accommodate excessive containers depending on space availability,” Zaidi said in a tweet.
“TOCs will also be allowed to use KPT land until May 15 for container landings between March 25 and April 30, 2020.”
The federal cabinet extends free time to provide assistance to the business community.
“However, at the end of this period and for containers that land between 25/03/2020 until 30/04/2020, a second load plate in place of demurrage will come into force,” a statement said. “The TOC will be allowed to utilize the KPT storage space during this period and even after the expiration of time, the storage space will not be rejected until 15 May 2020. The TOC will be facilitated to move their loaded boxes to the west and east docks. as long as the subject is locking room availability. “
The KPT, in coordination with the customs authority, will designate different locations as bonded areas according to the requirements to accommodate boxes that land during the locking period.
The port of Karachi, which handles 76 percent of the cargo, saw containers piling up with traders who did not complete important documents to get their goods delivered due to lack of transportation of goods amid a lockdown led by the corona virus.
Usually, around 10,000 containers land at the port every day. The number has dropped by 30 percent in the last few days. However, more than 6,000 containers still land at the port every day, and not all of them are cleaned. `
Traders said the incentive would not help many importers because the majority of cargo was handled at private terminals that refused to eliminate demurrage and extend the free period. In addition, no directives were issued for the Qasim Port Authority, they said.
“Around 80 percent of land imports are in private terminals,” said Khurram Aijaz, vice president of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). “The suspension of demurrage during this period is an incentive for cargo owners to speed up the process of taking their cargo shipments.”
Aijaz said the ministry did not direct private terminal or shipping lines operators to eliminate demurrage and detention costs.
“We have asked the terminal operators and the shipping company to only waive additional fees and not the principal amount of the lease, because the situation is not under anyone’s control,” he said. “They impose penalties that are too high to exceed the container limit, which sometimes exceeds the value of imported goods.”
Aijaz said the private terminal and shipping company had a monopoly and were constantly brave enough to write letters from the government. “Demurrage and detention have been ignored by companies in neighboring countries, so why not in Pakistan.”
Trader Naveed Qadir said private container terminals and shipping companies ignored ministry advisors to eliminate demurrage and container leases above the free period for any delays in loading / unloading operations or evacuation / arrival of cargo due to reasons caused by locking actions.
Qadir said international trade had almost stopped and there was no demand for empty containers, but shipping companies still claimed connection fees from importers. “FPCCI, the Karachi Chamber of Commerce and Industry, Customs authorities and even the maritime affairs ministry advised them to waive additional costs, but they are being strict.”
Customs agents and traders complained about the absence of appropriate precautions against COVID-19 at the terminal office and shipping company, where agents and importers had to queue for hours to take delivery orders.
An official said the terminal witnessed severe congestion due to the slow release of imported cargoes, but operators were reluctant to release penalties despite the fact that such neglect would encourage granting of cargo unloading permits.
Importers have begun to divert their shipments to bonded warehouses to avoid additional costs at the port. Taxable goods can be stored in bonded warehouses without payment of import taxes for a period of six months. The importer only pays taxes on the amount of goods released from the warehouse. Thus, traders pay taxes in some parts avoiding the tax burden immediately.