The economic crisis and financial meltdown along with the coronavirus pandemic and the Beirut Port blast have dealt a blow to the shipping sector in Lebanon. The banking restrictions imposed on dollar transfers abroad, accompanied with the dramatic drop in value of imports have also impacted the transport activity, as well as the revenues and profits of the shipping companies and forwarders.

Figures released by the International Chamber of Navigation indicated that the total number of ships that arrived in and departed from Lebanon’s coast dropped by 17 percent in the first half of this year, compared to the same period in 2020, bringing the total number to 614 ships. The number of Twenty-foot Equivalent Unit (TEU) containers fell by 22 percent in the same period, reaching a total of 322,000 containers. However, the total weight of loaded and unloaded cargo increased by 7 percent during the same period, reaching 2.4 million tons. In this context, Antoine Mouhayar, General Manager of Navigators Company, a freight forwarder, told Sawt Beirut International (SBI) that the drop in Beirut Port’s activity has affected the service providers at the port negatively, as well as the customs’ revenues, and the shipping companies’ revenues and profits.

Local consumption imports on the rise

The total number of TEU containers loaded with products for local consumption increased by 20 percent in the first half of the year, compared to the same period last year, reaching 117,000 containers. The Head of the International Chamber of Navigation for Beirut, Elie Zakhour, told SBI that this surge in imports is attributed to the growth in domestic consumption, with the tremendous demand coming from expatriates and tourists, following a partial recovery from the pandemic and with life returning relatively to normal.

Exports have also improved tremendously in the first half of this year, as the number of exported TEUs increased by nine percent, with a total number exceeding 36,000. Zakhour said that the Lebanese industry has benefited from devaluation and the depreciation in the value of the Lebanese pound. “Locally manufactured products have become more competitive abroad, and they are putting efforts to increase their exports and bring fresh dollars to the market,” Zakhour said.

Saudi Arabia’s decision that prohibited the entrance of agricultural products originating or transiting through Lebanon to its territory, had impacted the shipping sector severely, especially that the Saudi markets attracts a third of Lebanese exports, according to Mouhayar. Exporters have filled this gap by exporting to other Gulf countries such as Kuwait, UAE, and Qatar.

Transshipment nosediving

The repercussions of the coronavirus pandemic has impacted transshipment activity at Beirut Port dramatically, as it tumbled by 64 percent in the first half of the year compared to the same period last year, with the total number not exceeding 73,000 TEUs. Zakhour attributed this tragic drop to the economic situation that have worsened in some neighboring countries due to the pandemic. He added that the quality of services at Beirut Port have plummeted recently for several reasons, noting that shipments are delayed at the container terminal, incurring additional costs on shipping companies. “BCTC, the company that operates the container terminal, is unable to carry out the required maintenance of the gantry cranes, because the Lebanese banks have trapped it deposits, and prohibited it from transferring its money abroad,” Zakhour said. Only four of the 16 existing gantry cranes are currently operating.

Zakhour added that the lawsuits filed by the families of the victims of the explosion against Beirut Port has led to the withholding of all port’s revenues and transferring it to the competent court. This has undermined the Port’s ability to use its revenues for carrying out the required maintenance operations, and therefore, affected the quality of services.

Shipping prices

Suppliers and exporters are paying the cost of shipping in fresh dollars. Mouhayar said that at the beginning of the financial crisis, international shipping companies were charging 50 percent of the shipping cost in fresh dollars, and the other half via bank checks, but after the crisis exacerbated and with the Lebanese pound tumbling against dollar, shipping companies started demanding payments in fresh dollars. However, Mouhayar said that some companies such as CMA CGM and Cosco still charge a part of the cost as bank checks, adding that CMA CGM has allocated special support to farmers, where it charges them half the price in cash dollars and the remaining value through bank checks at an exchange rate of 3,900 LBP. As for freight forwarders they charge half of the cost in cash dollars and the remaining half at the exchange rate of 3,900 LBP.

Beirut Port rehabilitation is vital

Since the port explosion in August 4, the government has not taken any action to renovate the port’s infrastructure, buildings, and offices. Therefore, Mouhayar stressed the need to take major steps, mainly restoring the Customs offices dedicaed for paying custom fees. These offices have been moved after the blast to Rafik Hariri International Airport, and this incurring additional costs on brokers who are obliged to go to the airport, whenever they want to fulfill the custom duties.

Zakhour appealed to the government to kick off the projects for rehabilitating the port of Beirut through Bridge, Outsource, Transfer (BOT) contracts, to renovate the port and operate it, noting that several German and French companies have expressed their desire to invest in Beirut Port for its strategic location. Zakhour stressed the need for unlocking the port’s money and specifically BCTC’s money, in order to carry out the required maintenance for the container terminal and the gantry cranes to ensure providing high quality services and continue attracting transshipments.