KARACHI - A reduction in port charges, announced by the Karachi Port Trust and Port Qasim seem not to benefit the port business and trade as both are handling 100% captive cargo. Moreover, it will also result in lay off in overheads, the Nation learnt Monday. It is to be noted that Pakistani ports do not handle trans-shipments, which means only that cargo, imports, comes to Pakistan which is meant for the country or required. Therefore, the reduction in port charges will only benefit shipping companies. The port charges have been reduced twice in the past but there benefits were never felt in trade because there is no single authority in Pakistan to develop a consensus to make the charges unify which are imposed unfairly by ports, shipping lines, terminal operators, and others. The fact is that the shipping lines are currently doing business in negative flow in a hope that one day they will have old plausible environment for shipping lines, yet Pakistani port authorities have gullibly reduced the port charges without considering their captive cargo handling status. Singapore port has reduced its port charges about 35% in three months, so did Dubai and Colombo ports, but they are mainly dealing in trans-shipment which help them sustain and earn as well, in the time of global recession. No doubt port charges at PQ and KPT are highest in the region, but they should be reduced, nominally, keeping all prospects in view, otherwise it will have a negative impact on trade and ports business, said former Ports and Shipping director general Capt Anwar Shah. He elaborated that Pakistan totally depend on foreign lines for containerised export and import cargo of 1.7 mill TEUS, while the terminal operators must be regulated on the pattern of TAMP in neighbouring countries and Ministry may constitute a Tariff authority of Port and Terminals to regulate the tariff. The declining volumes on Asia-Europe and transpacific trades may exist till 2011, as US Trade has faded and west coast ports are facing 37% cut in volumes as dry bulk freight rates have plummeted and US Dollar has strengthened, he added. Due to excessive supply growth, zero margins will be seen till 2010 and these trade accounts for 60-80% of revenue of most Asian container, Shipping Operators, moreover, the expected trading losses may be 5% to 50% up to 2010, and if the condition persists for next 2 or 3 years, major operators will face solvency and serious funding problems, he pointed out. He said the decline in freight rates in 08, has surpassed industrys expectations as the magnitude in 09 and speed of decline has led to a situation where operators are unable to cover cash costs. He said that service rationalisation and cancellations, vessels lay ups and off hiring of chartered vessels is common in the industry Lay ups have reached 400,000 TEU in Jan 2009 compared to 150,000 TEU in Nov 08 or 3.2% of fleet capacity. The global container freight rate index is in negative on most of the sectors so are the time charter rates dipped 10,000 levels (Clarkson research), and the freight forwarders market remains fragmented, with no company having more than 2% of addressable market, he informed. The analysts have collected world-wide data on new deliveries and cancellations and concluded that supply/demand balance may be achieved by 2011, he said. He added that 2008-2010 volume growth forecast on transpacific is expected to be in negative i.e. (-) 1.3 to 3.8%, whereas for East Europe trade growth forecast will be (-) 6.2%, as there has been a rapid slowdown in Europe. He informed that some 1,000 container vessels had been laid up and now ship-owners are short of space to lie up in ports, thus requesting Sri Lanka to allow lay up in Trincomalee Bay which may accommodate 50 vessels. He advised that the Ministry of Ports and Shipping may also translate the crises in Shipping Industry by offering Ship-owners to lay up ships at Gwadar protected Bay, as total 1,000 ships are laid up and others are in line. Phillipines has translated crisis into opportunity by allowing ship-owners to lay up ships in Subic Bay and Davo protected anchorage and charging only 91/USD per day from owners, why cant we do the same to generate revenue by translating crisis into opportunity, he cited.