Pakistan cement industry hit by rise in transportation cost

Pakistan cement manufacturers are to set to be hit by a rise in transportation costs following hikes in coal and raw material carrier charges by the All Pakistan Goods Transporters Association, effective 14 April 2013.

According to sources, the association has increased charges for coal transportation from ports to upcountry from PKR900/t to PKR1400/t, depending on factory location. It has also increased freight rates for cement exports from ports in the south from PKR300/t to PKR600/t. As well as these hikes, the load limit per truck has been reduced from 70t to 50t which will have an inflationary impact on the transportation of coal/cement.

Sources said that this increase in transportation costs will impact heavily on different commodities, especially cement which will suffer a double blow due to the increase of raw materials carrier charges and the transportation of finished products.

The hike is likely to be passed onto consumers leading to a PKR15-20/bag increase in domestic cement prices. However, for exports via sea, prices are determined by the supply/demand situation in the country to which exports are being sent, so there is the possibility that exporters may not be able to pass on the rises.

Pakistan’s Cement industry has called on the government to intervene, arguing that the increases should be implemented gradually so that related business can adjust their requirements and resources accordingly.