Cargo piles up as logistics services hit by Pakistan’s foreign exchange crisis

Logistics providers serving Pakistan are being forced to cut back on services as the country’s struggling economy grapples with a foreign exchange crisis.

With foreign exchange transactions becoming a major challenge, leading express logistics operator DHL said it was forced to halt operations in Pakistan from March 15 for locally invoiced imports and limit the handling of outbound shipments to a maximum of 70kg until further notice.

“In recent months, regulators have imposed restrictions on overseas remittances for foreign companies doing business in Pakistan,” DHL Pakistan told customers.

According to DHL, the restrictions have severely limited its ability to continue offering the full range of product offerings for shipments originating from Pakistan.

This is not an isolated case. Virgin Atlantic is suspending its services between London Heathrow and Pakistan as part of a revised flight program for 2023.

The airline said its London-Lahore service and London-Islamabad route, which it launched at the height of the pandemic in December 2020, will see their final flights on May 1 and July 9, respectively.

“We regret that we have taken the difficult decision to suspend our services between London Heathrow and Pakistan,” Virgin said.

The FX shortage is also causing pain points for sea freighters operating out of Pakistan, although mainline operators continue to call at its ports, according to industry sources.

Maersk said it is “making every effort to effectively manage Pakistan’s foreign exchange crisis and maintain the flow of cargo” after consolidating operations in the country with the recent opening of integrated cold-chain logistics centers to support online pharmacy platforms.

It states: “In light of the current macroeconomic challenges, Maersk has continued to increase dialogue with all of its stakeholders to ensure trading functions as smoothly as possible.

“Through joint efforts with the government, financial institutions and other stakeholders, several actions have been taken that have shown positive results.”

And with importers unable to handle cargo, Pakistan’s Karachi Port and Port Qasim ports have had to deal with accumulations of heavy cargo. In response to industry requests, Pakistani decision-makers have announced an ad hoc waiver of port dues levied on containers stranded at the docks.

Pakistan’s economy is in an all-encompassing quagmire, causing runaway inflation that is unlikely to ease anytime soon. The government is reportedly expected to hold another round of talks with the International Monetary Fund this week over $1.1 billion in crisis containment support. Source: The Loading Star

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