lahore -  salman abduhu -

 The recent surge in transportation cost for both cement and coal would notably increase freight costs for the local manufacturers and analysts are expecting an increase of 50 rupees in the price of 50kg cement bag.

Though cement industry will pass on this rise to the poor consumers, it will definitely hurt local and export cement demand due to higher pricing, industry sources said, adding that increase of around Rs 50 per 50 kg bag is expected mainly fuelled by rise in cement transportation costs which are anticipated to escalate by 57%. According to sources, the carriers’ association has increased charges by thousands of rupees besides limiting the load volume per vehicle as per instructions of the concerned authorities. The rise in transportation charges has been announced by All Pakistan Combined Goods Transport and Transporters Welfare Association. The new charges were effective from April 14 2013. The transportation union in Karachi has become so strong that it has been virtually dictating terms. Rates are fixed daily by the union for trucks loading from Karachi/Port Qasim for upcountry and from factory to Karachi and Karachi port. In fact, the union representatives are now even going to the respective factories to ensure increase in freight rates for movement from factories in the north to Karachi port.

A cement industry executive said that the govt should intervene and immediately stop the all of the sudden imposition of the axle load restriction as it will hurt the industry. The systems should be introduced gradually so that the related businesses could adjust their requirement and resources accordingly.

Sources said that this increase in transportation cost will impact heavily on different commodities, especially cement which suffers the double impact both in terms of inward transportation of raw material and coal from ports to upcountry and transportation of finished products to ports for exports and local markets for domestic consumption.

Cement industry in Pakistan is using imported coal as its fuel and due to axle load implementation, freight cost for transportation of coal has been increased ranging from Rs. 900 per ton to Rs. 1,400 per ton depending upon the supplies to factories upcountry. It is likely to have an impact of around Rs. 30 to Rs. 35 per bag of cement. The sudden cost surge will increase the cost to cement producers.

 which they will ultimately pass on to the retail market to share the burden. Nabil Saleh, an industry expert at Taurus Securities Limited said that this rise in cost will hurt profitability of the cement sector which after a lean period in the FY08-FY11 has started to improve. In view of the foregoing, the sources in the industry were requesting the concerned authorities to postpone the implementation of axle load limit so that its launch could be planned properly by increasing the number of vehicles.