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3PL (third party logistics) in Pakistan and the potential of CPEC – Agility Pakistan’s take

As the leading 3PL logistics provider in the country with more than 700 employees across 8 locations countrywide, Agility Pakistan strongly believes in the potential of CPEC to emerge as a game changer in enhancing the economic potential of our nation. A mega project valued at approximately $46 billion, CPEC includes road and infrastructure projects that are about 3,000-km network of highways, railways and pipelines. This corridor will provide the shortest link to Indian and Arabian Ocean.

Of critical importance in the CPEC plan is China’s Xinjiang province in Pakistan’s immediate neighborhood. Xinjiang is China’s top cotton growing area, producing 60% of China’s cotton production. At present, the province is undergoing rapid industrialization under China’s plan of developing it into a major textile exporting hub with an investment of $27 billion in the province’s transport infrastructure for better connectivity in addition to the expansion of industrial hubs in the area. The strategic importance of CPEC for China lies in this premise; it provides a cost and time effective route for its heavy textile exports from Xinjiang to markets in the MENA region.

In the midst of this consideration, the question arises as to how Pakistan stands to benefit from this mega project which is one of the highlights of China’s One Belt One Road initiative. The reality is that CPEC is a huge opportunity for Pakistan to capitalize upon in terms of prospective infrastructural development which is expected to enhance our national production capability and establish a positive business environment for foreign investors.

As Pakistan braces itself to venture into the projects under the aegis of CPEC, it is imperative to debunk the myth that this initiative serves no benefit to Pakistan and will only allow the Chinese to take over the employment opportunities which it creates. One of the fundamental elements of CPEC lies in industrial cooperation. At present, the cost of production is steadily increasing for many industries in China due to increase in wages. Based on this aspect, 85 million jobs are expected to be relocated to various parts of Africa and Asia and with an injection of investment in infrastructure and industrial capability, Pakistani workers can benefit from these newly generated employment prospects. Even in the current projects which have been launched under CPEC, approximately a major share of the workforce belongs to Pakistan.

However, there are two sides of every coin. Despite of media fanfare and the promotion of CPEC’s vision amongst the masses, the project is still in its infancy stages and it can take up to two years for the Pakistani nation to witness its results. The condition of road infrastructure presented in the area is still in its developing stages and the construction of certain bridges and causeways along the route is ongoing. Furthermore, the Gwadar Port at present is not completely ready for port handling operations especially those involving large container vessels and other project cargo ships and further development is required to meet international standards in order to attract foreign carriers to call their vessels to Gwadar.

As the infrastructure development projects under CPEC progress towards their completion while, Chinese authorities move towards the development of Xinjiang province, this timeframe presents an opportunity for the industries in Pakistan to readily prepare themselves for the future in order to be able to fully benefit from what CPEC has to offer.

Of critical importance in this area is the trucking sector of Pakistan which stands at the risk of being undermined with the influx of Chinese transporters if proper initiatives are not taken to safeguard its interests. To mitigate this risk, Agility Pakistan presents the following recommendations to ensure that not only are the interests of the trucking industry secured but are also promoted with the advent of CPEC:

– The full implementation of Trucking Policy, 2008 should be ensured.
– The regulatory frameworks for local trucking industry that are non-existent at present should be drafted.
– Legislation relating to the regular carriage of goods which has not been formulated and upgraded to bring our trucking industry up to par with international standards should be established.
– The overloading on NHA Highway Network should be recognized as a major challenge which is destroying our road infrastructure.
– Rules for vehicle dimension (Length x Width x Height) should be extensively incorporated and implemented.
– At present, Pakistan severely lacks in the area of drivers’ learning and training. Therefore, a well-planned and proper drivers’ training facility must be established under NHA Motorway Police.
– Driver’s license to operate heavy vehicles should only be assigned by Motorway Police and drivers should not be allowed to drive heavy vehicles unless they have training certificate and license from Motorway police.
– A digitize point system for recording traffic violations should be introduced.
– Young and educated individuals should be encouraged to benefit from upcoming regional trade opportunities by entering the trucking industry as drivers.
– Special funding should be made available to modernize the local trucking industry.
– Chinese trucks carrying cargo from China should be restricted to Khunjrab – Sust Border so that the local trucking industry is assigned handling of cargo once it enters Pakistani territory.

CPEC has been widely publicized not only in national but the international media as a game changer for Pakistan. However, the extent to which our nation is able to capitalize on this opportunity depends upon the enhancement of our local capabilities in the sphere of logistics, trucking and supply chain management through the implementation of regulatory frameworks and policies to take this sector forward and become the backbone of CPEC and Pakistan’s economic development.

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