Pakistani exporters complain of increased insurance costs after Red Sea ship attacks

KARACHI: Pakistani exporters on Thursday complained that the recent attacks on vessels in the Red Sea had caused shipping companies to hike their insurance costs, which were in turn adversely impacting their businesses.
The Iran-backed Houthis have attacked numerous vessels in recent weeks. The rebels have said they are targeting ships in the Red Sea that have ties to Israel in protest over the Jewish state’s military offensives in Gaza. The rebels have warned ships against sailing toward the area. 
The attacks have caused concern for the import and export of food and other items through what is an important global trade route, and have pushed up the cost of insuring and shipping goods through the Red Sea.
“Shipping companies have increased the cost by over 100 percent for some regions,” Qasim Yaqoob Paracha, acting chairman of the Salt Manufacturers Association of Pakistan (SMAP), told Arab News.
“Even the rates for the Far East route, which has no direct link with the Suez Canal, have been increased.”
Paracha said the standard rate to export to Turkiye is $1,000, However, shipping companies are now charging an additional $1,500 to $2,000 per container for transportation.
He called on the government to take action to resolve the issue, saying Pakistan’s salt export industry is on the brink of collapse.
“Our salt exporters are navigating through an unprecedented crisis,” Paracha said, adding that disruptions in the Red Sea have compelled vessels to significantly change their routes, which in turn leads to increased costs.
Aasim Azim Siddiqui, Chairman of the All Pakistan Shipping Association (APSA) confirmed some shipping companies have increased insurance charges following the Red Sea attacks.
“The insurance cost has been increased by around $400 to $2,000 per container depending upon the size by some shipping companies,” Siddiqui said, quoting an advisory from a shipping company.
The APSA head noted that an increase in the insurance cost would further increase the cost of transportation to and from Pakistan.
Abdullah Farrukh, chairman of the Federation of Pakistan Chambers of Commerce and Industry’s (FPCCI) standing committee on shipping affairs, said the impact of increased shipping charges would be nominal on the overall value of goods exported.
“The impact on high-value goods would be minimal while those having low-value would have to incur a high-cost impact,” Farrukh added. 
“Stabilizing Freight Costs is of the utmost importance,” Paracha said, calling on the government to help exporters with temporary measures such as provision of subsidies or negotiating with shipping companies to adopt alternative routes. These measures would help regulate and stabilize freight charges.
In response to a question, Paracha said government officials have contacted SMAP for a possible solution to the issue.
Pakistan’s caretaker commerce minister did not respond to requests for comments till the filing of the report.