Soaring freight cost impacts exports

Shipments of textile goods rise just 2% due to high freight charges, port congestions

KARACHI:

The Pakistan Tehreek-e-Insaf (PTI) government is facing another hurdle in its endeavours to enhance exports as a hike in freight cost kept textile exports stagnant in August 2021.

Textile exports of the country came in at $1.46 billion in August 2021, registering a meagre rise of 2% on a month-on-month basis in rupee terms, revealed data of the Pakistan Bureau of Statistics (PBS).

According to market analysts, the exports were impacted by the global congestion at ports combined with soaring freight charges. The cost of a container from China to Pakistan has swelled threefold.

Despite rising demand for textile products around the globe, Pakistan’s exports remained stagnant as the congestion at global ports and high freight charges triggered a slowdown in export orders, said Arif Habib Limited analyst Arsalan Hanif.

Citing data, he said that foreign shipments of value-added textile recorded a decline of 4% in August while exports of knitwear and readymade garments fell 7% and 6% respectively on a month-on-month basis.

“If this trend persists, it may result in cancellation of export orders and our clients can prefer to place orders with neighbouring countries to reduce the cost of import by paying lower freight charges,” said Hanif.

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He, however, pointed out that textile exports rose 45% in August 2021 compared to the same month of last year due to a low base effect.

Endorsing his remarks, Topline Research analyst Saad Ziker said that textile exports were up 8% and 5% in August 2021 compared to average exports in the past six and three months respectively.

“Foreign shipments of cotton yarn and yarn other than cotton climbed 15% and 71% respectively in August on a month-on-month basis,” he said.

Compared to last year, Pakistan’s textile exports were up 45% in dollar terms and 42% in rupee terms in August 2021, he said.

The growth came largely due to an exceptionally low base last year when both global and domestic operations were disrupted by Covid-led restrictions and lockdowns, said Ziker.

He pointed out that Pakistan’s textile industry was enjoying an advantage due to Covid-19 curbs in regional countries such as India and Sri Lanka.

Published in The Express Tribune, September 18^th, 2021.

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