IMPORTANT MILESTONE IN PAKISTAN'S PORTS DEVELOPMENT
CAPTAIN ANWAR SHAH
Sep 24 - 30, 2012
With an agreement signed on 31 July 2012 by US and Pakistani officials, Pakistan routes to Afghanistan were reopened, after its closure since November 2011, when 24 Pakistani soldiers at a border post were killed by US air raid. This is another landmark in the history of the relationship between the US and Pakistan. It also demonstrates the strategic importance of Pakistan in the logistics chain in trade and aid for the Central Asia region.
The two routes from Pakistan to Afghanistan were mainly used by NATO to transport fuel and other supplies. Both routes originate at Pakistan's principal port Karachi. From there, one route crossed the Khyber pass, enters Afghanistan at Torkham and terminates at Kabul; while the other crosses the border near Quetta and ends at Kandahar. Until the border closed November last year, around 5,000 trucks a month had made their way from Karachi port along both routes transporting NATO supplies to other NATO logistical hubs in Afghanistan. There were more than 3,800 vehicles and 1,900 containers belonging to NATO stranded at Karachi ports during the 7 months of Pakistani border closure.
Strategically, these two important routes are expected to act as the main transport backbones for goods loaded at Karachi ports and transported to Afghanistan and onward to Tajikistan, Uzbekistan and Turkmenistan. Their role of these routes through Pakistan will become significantly more important with the commencement of operation of the Pakistan Deep Water Container Port (PDWCP) at Keamari which is planned for in the first quarter of 2014. This marks an important milestone in the development of ports in Pakistan, which will be equipped with the most advanced container handling facilities in the East region of the Indian Sub-Continent and become the gateway of goods and people to its neighbouring countries, Central Asia and beyond. This is a significant event for the people of Pakistan, and it is thanks to the vision of the Ministry of Port & Shipping, Government of Pakistan and the Karachi Port Trust (KPT).
Blessed with a natural geographic location, Pakistan is of great importance in trade and development of the region, bringing long term benefits to a combined population of around 100 million people in the Central Asian region. Afghanistan is a good example where the majority of its trade is facilitated by the ports of Pakistan. The US also relies on Pakistan ports and its routes for most of their equipment for its war effort in Afghanistan. It also needs Pakistani territory for meeting its fuel needs. Equipment and fuel is transported from Karachi ports into Afghanistan through the Khyber Pass. Strategic Forecasting, a Texas-based private intelligence entity noted that: "Pakistan remains the single-most important logistics route for the Afghan campaign. This is not by accident. It is by far the quickest and most efficient overland route to the open ocean." It is obvious that Pakistan has the potential to become an important trade corridor for South Asian countries. With the opening of the PDWCP, Pakistan can further leverage its location advantage to strengthen itself as the major hub to provide transit corridors for those land locked countries, particularly Afghanistan, Iran, India and China.
Like any projects, execution is the key to success. It is comforting to note that a great deal of progress has been made with the PDWCP at Karachi, a major part in the logistic chain. However, more needs to be done to ensure that the PDWCP realize its full potential. There is a pressing need for a complete well considered plan to build the other part of the infrastructure jigsaw puzzle i.e. adequate road and rail connectivity to upcountry destinations and related logistics support facilities. Without this, the PDWCP will be under-utilised and shall remain a half completed dream hampered by inadequate infrastructure and services along the route as well as congestion in the areas surrounding the port at Karachi. In my opinion, as I have stated before, a Deep Water Port Act is imperative to recognise the efforts of all concern and to lend legitimacy to other laws and regulation needed to further boost the entire logistics industry.
A well functioning transport system to connect between the seaport and its surrounding land locked countries is the pre-requisite for trade to take place and earn the wealth of the country. There is an urgent need for Pakistan to improve its transport infrastructure and ensuring the efficient management of all facilities through various public and private measures. As stated by Javaid Mansoor from National Trade & Transport Facilitation Committee Pakistan, means to enhance connectivity for land locked developing countries include: "improve road and rail infrastructure and regional linkages; harmonise trade and transport regulatory framework to remove barriers to trade; and enter into regional and bilateral transit transport agreements laying down procedures". Pakistan must sign TIR carnets and guaranting Association. TIR carnet is of 20 pages and as of today 56 countries and 18 contracting parties are using TIR. We must learn from Turkish experience. We may generate substantial revenue as transit dues in foreign exchange.
These are not new to South Asian countries. The 14th South Asian Association for Regional Cooperation (SAARC) Summit held in New Delhi in 2007 has decided to pursue the implementation of Asian Development Bank-funded SAARC Regional Multimodal transport connectivity recommendations, however, solid measures are yet to be taken and consensus is yet to emerge on projects to be implemented.
Other than the "hardware" i.e. the infrastructure, there is also a need to ensure that changes in the "software" goes hand in hand. There is a need to examine the customs procedures, laws, and a tariff structure that caters economically to stimulating regional trade. Ghana, Africa provides a good example. In recent years, Ghana Ports and Harbours Authority has been very active in promoting transit traffic for those land locked countries. For a period of time, Ghana has been collaborating with its land locked neighbors such as Burkina Faso, Mali and Niger for the enhancement and use of the Ghana corridor. To attract transportation of goods to and from the landlocked countries many agencies in Ghana have made efforts at collaborating with their counterparts or similar agencies in the landlocked countries. For instance, Ghana Shippers' Authority signed MOUs with its Shippers' Councils of Burkina Faso, Niger and Mali in 1998, 2000 and 2003 respectively, for the purpose to offer mutual assistance to shippers in the transport chain, exchange relevant trade information within the region, initiate effective systems to monitor cargo movement at Ghana corridor, harmonise customs procedures, promote free flow of traffic between Ghana and land locked countries.
Pakistan can do the same! It is the mission of KPT and Pakistan Government to take the initiatives to build connecting roads and related infrastructure to cater for efficient cargo flow enabling the full utilization of the Deep Water Container Port. There are already government policies to support the growth of shipping, freight forwarding, distribution, trucking, railroad transport, etc. It is encouraging to note that some initiatives are already in good progress, for example, road transport agreements between Pakistan and Uzbekistan, Tajikistan and Turkmenistan were initiated and in recent past FPCCI hosted a meeting of CAS countries where I represented FPCCI as Transport consultant. It is expected to see more measures to be initiated by the Government as well as private sectors to capitalize on our strategic geographical location and maximize benefits to Pakistan and its citizens. The ultimate beneficiary of the use of the Pakistani corridor by the landlocked countries is the Karachi Port Trust (KPT) and by extension, the government of Pakistan. Transit cargoes will add to throughput at the port thus increasing the revenue of the KPT.
Furthermore, it is expected new business opportunities will emerge to support the operations of the Karachi port in the coming few years. I can see there will be investment opportunities arisen for warehouse and other storage facility providers, as these services are essential to transit trade and the demand for them in and around the seaport will increase because forwarders need a lot of time to arrange transportation of their cargoes to the consignees in the land locked countries. Another business to be benefited from that is freight forwarding providers, with cargoes originated from Karachi, these company can provide economic solutions for movement of containers or cargoes across the region over long distance to land locked states. The ICD's developed at Lahore with Rail Road connectivity can play a vital role as Lahore is on North/South and East/West corridor. Pakistan Railways must go on PPP by allowing private sector to acquire rolling stocks and implement track access policy, as rail road is the cheapest mode of transport after sea.
The construction of the PDWCP will no doubt enhance our competitive advantage along the South Asian region further. The new terminals will enable KPT to handle and cater fifth and sixth generation ships with 100,000 deadweight tonnage (DWT) having 16 metres of draft. As said by Azhar Hayat, KPT General Manager (Operations) "The development of PDWCP will further boost the volume of trade through Asian Highway Network and Trans-Asian Railway Network." There is only one terminal is being planned at PDWCP at present, the growth potential is tremendous. The Karachi Port Trust needs to be focused by expending its resources on the PDWCP to bring the vision to fruition. KPT needs to articulate its long term vision for the overall development of Karachi Port in a manner that will attract further investment in future phases of the PDWCP. We have sustained efforts, not piecemeal, to ensure that investors continue to have interest in investing in future phases of the PDWCP, which effectively supports the vision of our country.
Pakistan has all the necessary ingredients and tremendous potential to emerge as the most efficient and advanced trade corridor for South Asia region linking Europe with China and the East, after the opening of PDWCP in few years time. As a Pakistani, I am confident that these will be done and efforts from both public and private sectors will be expended to complete the deep water seaport be the most efficient, advanced and profitable ports in the region. Much has been debated by interested parties, professionals and experts on the strategic location of Pakistan. But, we must go beyond just talk and no action. Ministry of Ports & Shipping is the only vibrant Ministry inducing FDI and local investment thus must be commended. I was witness to ceremony chaired by PM of Pakistan at Governor House Karachi, where Minister of Ports & Shipping initiated a proposal of joint venture company of PNSC and PSO, to acquire two tankers so that all PSO imports in future be carried on Pak flag ships. It is a good omen, thus efforts of Minister of Ports and Shipping and Minister of Petroleum resulted in signing of MOU for a J.V. company and lifting of furnace oil by PNSC so new purchases by PSO will be on FOB, not C&F as in the past. A commendable initiative by Public Sector Companies as private enterpreneurs are shy to invest in ship owning due to high financing cost,.
The Writer is Share holder Director Pakistan National Shipping Corporation.