Pakistan is in deep economic crisis, due to the shortage of foreign exchange and the control of logistics suppliers providing services to Pakistan are being forced to cut back on services. DHL said it would suspend its local import business in Pakistan from March 15, Virgin Airlines will stop flights between London Heathrow Airport and Pakistan, and shipping giant Maersk is taking active measures to ensure the flow of goods.

Not long ago, Pakistan's current Defense Minister Hwaja Asif made a public speech in his hometown, saying: Pakistan is about to go bankrupt or face a debt default crisis, we live in a bankrupt country, and the International Monetary Fund (IMF) has no way to solve Pakistan's problems.

data released by the Pakistan Bureau of Statistics (PBS) on March 1 showed that in February 2023, Pakistan's inflation rate as measured by the Consumer Price Index (CPI) soared to 31.5%, the highest increase since July 1965. Data released by the National Bank of Pakistan (Central Bank) on March 2 showed that as of the week of February 24, the Bank of Pakistan's foreign exchange reserves were 3.814 billion US dollars. According to Pakistan's import demand, if there is no new source of funds, this foreign exchange reserve can only support 22 days of import demand.

In addition, by the end of 2023, the Pakistani government will have to repay up to US $12.8 billion in debt, of which US $6.4 billion will be due by the end of February. In other words, Pakistan's existing foreign exchange reserves not only cannot afford foreign debts, but also cannot afford much-needed imported materials. However, Pakistan is a country that is highly dependent on imports for agriculture and energy, so all kinds of negative situations are superimposed, and the country is indeed on the verge of bankruptcy.

Logistics companies forced to cut services and take emergency measures

With foreign exchange trading becoming a major challenge, express logistics giant DHL said it was forced to suspend its local import business in Pakistan from March 15 and limit the maximum weight of outbound goods to 70kg until further notice.

"In recent months, regulators have imposed restrictions on remittances from foreign companies operating in Pakistan," DHL Pakistan told customers. According to DHL, these restrictions have seriously affected its ability to continue to provide a full range of services for goods emerging from Pakistan.

this is not an isolated case. Virgin will stop flights between London Heathrow and Pakistan as part of its revised flight plan in 2023. The airline said that its London-Lahore and London-Islamabad routes were launched at the height of the epidemic in December 2020 and will carry out the latest flights on May 1 and July 9 respectively.

According to industry sources, although trunk line operators continue to call in Pakistani ports, the foreign exchange crunch has also brought pain points to sea carriers operating in them.

Maersk said it was "making every effort to effectively deal with Pakistan's foreign exchange crisis and keep goods flowing" and recently opened an integrated cold chain logistics center to consolidate its business in the country.

Maersk said: "In the current macroeconomic challenges, Maersk has further strengthened its dialogue with all stakeholders to ensure that trade proceeds as smoothly as possible. Through cooperation with the government, financial institutions and other stakeholders, a number of measures have been taken and positive results have been achieved."

Pakistan's ports of Karachi and Qasim had to cope with a mountain of cargo because importers were unable to clear the goods. In response to the industry's demands, Pakistan announced a temporary waiver of the costs incurred by containers stranded at the terminals.

Pakistan's central bank issued a document on January 23 suggesting that importers can extend their payment period to 180 days (or more). Pakistan's central bank said that a large number of containers filled with imported goods were piled up in Karachi port because local buyers could not get US dollars from banks to pay for the goods. Khurram Ijaz, vice president of the Federation of Pakistani Chambers of Commerce and Industry, said an estimated 20000 containers were trapped at the port.

The Pakistan Shipping Agency Association (PSAA) is concerned about the rapidly deteriorating situation. It issued a notice to Pakistan National Bank and government leaders warning that shipping companies represented by them may consider suspending the country's services.

Source: China Merchants Association