On May 25, a landmark event took place in Pakistan's southern port city as the Russian cargo vessel arrived at Karachi International Container Terminal (KICT) marking the beginning of a direct shipping link between the two nations.
Loaded with 2000 transshipment containers, Crystal Saint Petersburg's arrival is highlighting the profound market access and cost-saving benefits it brings to Pakistani exporters targeting Russia’s extensive consumer market.
It's worth noting that India and China became the largest buyers of Russian energy last month, accounting for more than two-thirds of the country's coal exports sent to Asia. Meanwhile, South Korea, Vietnam, Malaysia, and Sri Lanka have also become significant buyers of Russian energy items, with Saudi Arabia and the UAE stepping up their purchases of Russian fuel.
Now it seems that Pakistan is also realizing the immense benefit it can reap from improving its bilateral trade ties with Russia.
The ceremonial welcome that Crystal Saint Petersburg received upon her arrival is a testament to the budding trade ties between the two nations.
Landmark Occasion
Federal Minister of Energy Khurram Dastagir, Minister for Maritime Affairs Faisal Subzwari and Consul General of Russia H. E. Andrey Viktorovich Fedorov welcomed the vessel during a ceremony held in Karachi.
The ministers said that the arrival of Crystal Saint Petersburg is a "landmark occasion" as it is the start of direct shipping service between Russia and Pakistan, which is being described as a new chapter in the bilateral relations.
At the inauguration ceremony energy minister Khurram Dastagir said that the start of direct shipping service between the two countries would further deepen the bilateral economic relations.
“Connectivity, especially through trade and infrastructure, is part of a vision of the present government for prosperity,” Dastagir said, adding that an accord was signed last week to boost trade relations between the two countries.
He went on saying that the Russian economy is five times bigger than Pakistan's by GDP, hence, Pakistan is seeking a comprehensive free trade agreement with Russia.
“We are slashing tariffs and promoting investments," Dastagir announced during the ceremony.
Potential of the New Shipping Service
The arrival of the container ship marks a new shipping service which is the result of an agreement between Pak Shaheen (Private) Ltd. and Russia’s Neco Line.
According to Abdullah Farooq, CEO of Pak Shaheen Limited, the service would benefit the exporters greatly, because the majority of exporters were not able to utilize the full potential of the Russian markets due the high freight costs on transshipment of goods.
Hence, the launch of a direct containerized shipping service between Karachi and Saint Petersburg is set to reshape trade relations between both the countries, with immense business opportunities and the potential to extend bilateral trade up to $20 billion, according to Farooq.
"A direct shipping service will prove a game changer and pay the way for deepening of trade ties in the form of free trade agreement between the two countries,” the CEO added.
He explained that the new shipping service will help to export textile, surgical, sports, leather goods as well as fruits and vegetables to the Russian market directly from Pakistan.
Meanwhile, the managing director of Neco Line, Alexander Bersenev, also welcomed the new service saying that it would now take only 22 days between the ports of Karachi and Saint Petersburg under the direct shipping service.
Talking about the payment method Bersenev said that the payment under this direct shipping service would be made in Chinese currency Yuan.
Deepening of Bilateral Trade Relations
Currently, Pakistan’s exports to Russia hover at $150 million, while imports stand at around $300 million. However, the launch of the direct shipping service is projected to boost Pakistani exports to Russia by $2.5 billion in the coming years.
For now the frequency of Russian vessels operating under this service will be one vessel per month, with plans to increase it to three vessels per month within the next six months.
The direct shipping service is also set to increase Karachi's port revenue by 40 percent.
Some reports suggest that a second direct ship from Russia is expected to arrive at the port by May 29.
The arrival of this vessel comes at a time of speculations related to export of Russian crude oil to Pakistan. After months of negotiations the first shipment of Russian oil is expected to dock at the Karachi port in late May, according to the State Minister for Petroleum, Mussadik Malik.
The country would seek to import 100,000 barrels per day (bpd) of Russian crude oil if the first transaction went smoothly, he added.
Initially, the Pakistan Refinery Limited (PRL) would refine the crude oil in a trial run, to be followed later by Pak-Arab Refinery Limited (PARCO) and other refineries. Malik also shared that Pakistan plans to import one-third of the country's total crude oil requirements from Russia.
The minister expressed hope that this move will substantially lower petroleum product prices for domestic consumers, as the current prices due to the inflation have wreaked havoc on people's purchasing power.
Meanwhile, Crystal Saint Petersburg after spending some days in Karachi is set to return to Russia with Pakistani products, such as textiles, leather goods, spices, Himalayan salt and others.