Oct 29 - Nov 4, 20

An efficient and cost effective transportation system is the backbone for any economy to ensure both upstream and downstream logistics are managed and that people find it convenient to commute. Transportation system in Pakistan with more than a six decade history should have been at par with western markets if focus was brought into this area. The industry has been hit with consistent rise in fuel prices and unavailability of CNG which increases the cost of transportation thereby increasing inflation from the supply side. Pakistan does not have a mechanism whereby the transportation system could be regulated to ensure price does not increase exponentially as witnessed time and again. The system has been plagued with corruption and mismanagement which has caused problems for all. The transportation system in Pakistan mainly includes Buses, Rickshaws, Taxis, Cars, Trucks, Trains and airplanes.

Regular buses do not escape one's sight while commuting on a daily basis. These buses, though in poorest of shape with maintenance serve as the best mode of transportation for those earning a minimum wage. The bus owners tend to increase the bus fares with increase the price of oil. However, when the oil prices tend to decline, the fare charged does not reduce which gives the owners higher income which tends to be unjustified. Buses owners have frequently called strikes to revolt against the price of oil, however, tend to pass on the effect to the commuters. Even if the price of fuel as an example increases by 5 percent, the fare charged would increase by more than 10 percent or even higher since there is no price control mechanism in place which would keep a check on the fare charged. If the government takes any action against the system, strike is called which results in a greater economic loss through production losses as workers cannot reach work. The mainstream buses which includes mini buses therefore has the leverage to charge the price as they please and tend to have a higher bargaining power than the government. With increasing population in urban areas, it is estimated that another 1,000 buses alone will be added in Karachi, being the largest city of Pakistan over the next two years.

The government took a good initiative to import CNG Rickshaws to give cushion to commuters with cheap transportation. The problem with the system is again control over the fare charged. Fare meters are almost always tampered which cannot be relied on. Commuters therefore have to negotiate a fare. The general consensus is such where Rickshaw drivers charge PKR 15 to PKR 20 per kilometer if the negotiation is mapped in Rupee terms. Another issue is that Rickshaw drivers tend to charge as per location rather than distance where drivers have made a hypothetical fare assessment based on the location rather than the distance involved between two given points. Those driving Rickshaws in Clifton and Defence charge more with a 1km distance charged not be less than PKR 40. Places where Rickshaws tend to congregate tend to form an alliance and would charge similar rates. Negotiation in such cases is a counterproductive exercise. It is estimated that Rickshaw drivers in Clifton and Defence being the highest and most attractive avenues tend to earn PKR 20,000 to PKR 25,000 a month.

The issuance of Taxis through the Punjab Taxi Scheme has been met with success. The Punjab government allocated PKR 4.5 billion in FY12 to provide 20,000 yellow cabs, the biggest recipient being Pak Suzuki. The issues with the taxi scheme is no different from Rickshaws where the price control methodology or defining a fare is dependent on the taxi cab independent of the distance to be travelled. Many have not installed meters and those who have are either out of order or not used at all. The private Taxi service e.g. Metro cabs, Avis etc. are well managed where the pricing is transparent and defined. It is unfortunate that such a mechanism cannot be put in place nationwide with to keep a check on the pricing of fares charged. Classic example includes the New York taxis which have fares printed on the door panel.

With rise in international oil prices, small cars upto 1,300cc are expected to capture a wider market which will give local assemblers stiff competition. Most of the cars imported fall in the category of 1,000cc to 1,300cc which is a cause of concern for local manufactures who constantly push the government to increase duties and tariffs on imports to make them uncompetitive in the domestic market, hence hindering further imports. Local assemblers find themselves in a challenging environment to compete with imports on the basis of price and features offered. It is expected that cars sold at a price point below PKR 1 million will pose a threat for domestic assemblers in terms of competition. The country imported 54,000 cars in FY12 expected to increase to 80,000 cars almost 50% of the domestic demand by FY13. Car dealers are pushing the government to allow import up to 10 years old whereas auto assembles want the tenor to be reduced to 3 years.

Pakistan Railway is being eaten from within with deep rooted mismanagement and corruption. Land mafia has taken over land owned by Pakistan railway. Tickets are sold in advance and often at times at a higher price more than what's defined. Almost 50 percent of the trains are out of order. Raw materials including various oils, spares and office equipment are being procured at a rate higher than market price. The existing locomotives are in poor condition and require maintenance for which budgets are not available.

Economy like Malaysia and Dubai who have developed after Pakistan have left Pakistan far behind when it comes to transportation efficiencies. Monorail in Malaysia and Dubai runs between downtown and office complex which pulls traffic away from roads and is a cheap and quick mode of transportation. With the two major business hubs including I.I.Chundrigar Road and Shahrah-e-Faisal, why cannot such a system be put in place if we talk about Karachi alone? The London underground construction commenced ion mid 1850's and today is regarded as the best underground systems in the world. In western markets, the bus ticketing system is automated as soon as a passenger enters the bus, therefore eliminating the need for a conductor to collect the money as seen in Pakistan. Though these may seem far fledged ideas for Pakistan, the post important aspect is to have a price control mechanism in place for public transportation.