Shipping costs to US rise as Iran war disrupts trade routes

Shipping costs for Pakistani exporters to the US have risen more than 200 per cent on some routes as the backlash from the Iran war disrupts shipments.

KARACHI: Shipping costs for Pakistani exporters to the US have risen more than 200 per cent on some routes as the backlash from the Iran war disrupts shipments.

Shipments from Karachi to New York, which previously cost around $2,000, are now being quoted at $8,000 to $9,000, said Ismail Suttar, founding chairman of the Salt Manufacturers Association of Pakistan (SMAP), warning that the rise in costs could weaken the competitiveness of Pakistani products in the US market.

Suttar urged the government to take immediate notice of the situation and plan an emergency strategy to cope with the matter.

“Shipping rates have increased globally, but the increase on some routes from Pakistan is disproportionately high,” he said, adding that exporters were being forced to pay additional costs.

He said the Karachi-Jebel Ali route had also been affected by the disruption, where freight charges that previously stood at $100-200 had risen to around $4,000-5,000, while vessel availability had declined considerably. The resulting supply-demand imbalance had further raised rates, he added.

The cost differential is particularly stark compared with competing export destinations, he said. A container from Vietnam to New York currently costs around $3,000-4,000, compared with $8,000-9,000 for the same shipment from Pakistan.

“This creates a difference of around $5,000 for Pakistani exporters and puts them at a clear disadvantage when competing for international orders,” he said.

Suttar also pointed to Pakistan’s lack of an effective national shipping carrier and an adequate containerised cargo fleet as structural disadvantages. Countries such as China and South Korea have national carriers that support their trade during periods of international disruption.

He called for the urgent formation of an inter-ministerial committee including exporters, shipping companies and relevant government agencies to assess the extraordinary rise in freight charges and devise measures to provide relief to exporters.

Failure to intervene promptly, he warned, could lead to a decline in export orders, place further pressure on foreign-exchange earnings and weaken Pakistan’s position in international markets.

“The government needs to move from a reactive approach to proactive policymaking and continuously monitor changes in global shipping routes, freight rates and supply chains,” he said.