Shipping lines hint at war risk premium

KARACHI, March 20: The foreign shipping companies started giving warning signals to the exporters for imposing war risk premium (WRP) charges hours after the US attacked Iraq early on Thursday morning.

“As yet we were not given anything in writing because the local agents of these shipping lines are yet to received advice from their respective headquarters aboard for the imposition of premium,” a leading exporter said.

Nevertheless, the representatives of shipping companies have verbally communicated the message, giving strong hints that within next 24 hours they would be receiving written advice from their companies for the imposition of WRP, former chairman, Pakistan Bedwear Exporters Association (PBEA), Shabir Ahmed, told Dawn.

“The first call I received on Thursday,” Mr Shabir said, “was from my local shipping agent who indicated that the imposition of the WRP is on the cards as most of the shipping companies have already chalked out their plans and working on the WRP much ahead of the Iraq war.”

The foreign shipping companies during the Afghan war had also imposed war risk premium on ships calling at Pakistani ports, although the country was no where near the war zone. Despite strong protest from the exporters the shipping lines did not immediately remove the WRP and even remained imposed much after the war was over.

The shipping companies are also indicating that the transit period may also prolong as the vessels will have to avoid the war zone, particularly the Gulf, and have to adopt longer routes, resulting in higher freight charges.

There is uncertainty and exporters are constantly receiving telephone calls from their foreign buyers, who are skeptical about timely shipment of their goods.

The rising oil prices in the world market are not only enhancing the local transportation and freight charges, but are also increasing raw material prices, particularly of polyester staple fibre, which is widely used by the value-added textile industry. Another factor, which is damaging to country's exports is the appreciation of the rupee against the US dollar.

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