Logistics giant DHL trims Pakistan operations

• German company to suspend import operations from March 15.
• It will limit outbound shipments to a maximum weight of 70kg.
• Nation struggles with balance of payment crisis, low forex reserves.

KARACHI: Logistics giant DHL Monday announced to scale down its operations in Pakistan from next month, blaming restrictions by the government on outward remittances for foreign companies' operations in the country.

In a customer notice, the German company said it would suspend import operations and limit outbound shipments to a maximum weight of 70kg per shipment from March 15, 2023, for all customers billed in Pakistan. The last pick-up date would be March 14, 2023, it added. “Shipments picked up on or before this date will still be delivered.”

The development came as Pakistan struggles with a balance of payment crisis amid alarmingly low foreign exchange reserves, enough to cover imports of less than a month.

The government has reportedly restricted outflows of the US dollar, leaving many companies in a delicate situation. “This constraint has made it unsustainable for DHL Express to continue providing the full product offerings in Pakistan,” the company said.

In the case of DHL Express, the remittances sent by the company's Pakistani arm cover the cost of DHL’s international aviation, hub, gateway and last-mile delivery "incurred through our global network for the shipments sent/received by our valued customers, according to the customer notice".

Import curbs, followed by restrictions on dollar outflows, have affected a number of industries in Pakistan. Textiles, auto, and even pharmaceuticals have also been complaining about the curbs, which have forced many companies to halt or reduce their operations.

“We apologise for this unfortunate development and assure you that we understand the significance of express shipping for your business and supply chain. We are in regular contact with the authorities to allow pending remittances for us to resume the full suite of services in Pakistan at the earliest,” DHL Express Pakistan said in the notice.

Back in December 2022, the International Air Transport Association reported that Pakistan was among the top markets with blocked funds, as the country was yet to pay $225 million in airline funds for repatriation.

Pakistan was ranked second, in the top five markets (excluding Venezuela) with withheld funds of $225 million, followed by Nigeria which has blocked up to $551 million. The other countries include Bangladesh ($208 million), Lebanon ($144 million) and Algeria ($140 million).

The country is currently holding negotiations with the International Monetary Fund to reach a staff-level agreement that would pave the way for the release of over $1 billion loan tranche.

Originally published in The News