New tracking devices: Bonded carriers face additional burden of over Rs300m

KARACHI: Pakistan’s transit trade sector faces unprecedented turmoil as bonded carriers are forced to bear an additional burden of over Rs 300 million for installing new tracking devices, following what industry experts call a poorly planned gratuitous interim tracking arrangement by the Directorate of Transit Trade (DTT).

The interim tracking arrangement, set for 90 days, has come under scrutiny for its effectiveness, particularly due to the absence of Container Surveillance Devices (CSDs). Industry experts warned that this gap in surveillance could lead to significant cargo pilferage during transit operations.

The DTT has implemented a new Standard Operating Procedure (SOP) requiring all bonded carriers to install Prime Mover Devices (PMDs) through designated companies - NLC Smart Solutions (for KEPZ), V-Track, Askari Insurance Co., and Falcon-I (for other consignments). However, this interim arrangement has been criticised for lacking crucial CSDs, raising serious security concerns about cargo movement.

“It’s like installing an alarm system but leaving all the windows open,” industry experts said. However, these tracking companies have also expressed reluctance to install CSDs during the interim period without formal licensing agreements.

Representatives from these tracking companies said: “This is not a wise decision to start installing CSDs without having a license and a formal contract,” resulting this makeshift solution that might be worse than the problem it’s trying to solve.

Nine tracking companies, including the previously dominant TPL Trakker, have thrown their hats in the ring for new licenses. However, industry experts predicted a bumpy ride ahead: even after licenses are granted, it could take up to four months to procure and install CSDs.

“The tracking companies after getting licenses may require 3-4 months to procure and install CSDs, leaving no option for the customs department but to rely solely on PMDs for cargo monitoring during this period,” industry experts said.

Just 19 days into the new system, troubling reports are already surfacing. Sources informed about abnormal cargo stoppages and poor coordination between convoys and drivers, adding, “The possibilities of huge pilferage are high due to absence of CSDs”.

“Without monitoring devices on the container locks, there is no technical certainty that the prime mover trucks will carry the cargo they are meant to,” warned the Pakistan Business Council (PBC), highlighting risks of cargo diversion and revenue losses. “Misuse of the transit trade arrangements causes loss of tax revenue, undermines local industry, and impacts employment,” the PBC said in a statement.

Meanwhile, All Pakistan Customs Bonded Carrier Association (APCBCA) has strongly opposed the new system, highlighting multiple concerns in a letter to the DG Transit.

“The new implementation violates Rule 1118 (1), which requires both PMDs and CSDs. Moreover, bonded carriers, having already invested Rs. 560 million in previous tracking devices through TPL Trakker, are now forced to install 12,000 new PMDs without any protection against future obsolescence,” APCBCA said.

A senior customs official, who is close to the matter, spoke anonymously that all PMDs from disqualified tracking companies would be removed after the 90-day interim period, forcing carriers to reinvest in new devices.

He admitted the department’s failure in establishing itself as an effective regulator that helped TPL Trakker maintain its iron grip on the tracking system for nearly 11 years.

Replying to a question, he said that the third-party security audit got conducted by TPL, was to review the documents and interviews with the team leads and selected employees and its second query was, if they upgraded/ secured their IT infrastructure whenever the customs field formations reported non-functioning of the tracking devices.

Moreover, he informed that TPL had admittedly failed to carry out hybrid satellite plus GMS tracking but collected the cost of satellite tracking from the transport operators. Therefore, a notice of around Rs.445 million has been served to recover unjustified satellite tracking charges,

he added.

When contacted, a representative from TPL Trakker said that the DTT in its letter on the audit report mentioned that by and large TPL Trakker’s system was found complying with the set IT standards and confirmed that it was the first audit since inception.

He said that TPL Trakker informed the Directorate that the satellite tracking was unserviceable since October 2023 and had repeatedly proposed the induction of AT-10D devices with revision of rates to enhance the effectiveness of tracking and monitoring in the constantly evolving environment.

“Despite expressing concerns on an effective monitoring and tracking of vehicles and cargoes on Taftan-Quetta route with existing devices, no action has been taken till the termination of our tracking services,” a TPL representative said.

He confirmed that the termination order of TPL Trakker was issued in October 2024; however, the period of the termination of the license was extended till December 31, 2024, due to what customs said to safeguard the seamless flow of the trade. To a question, he said that they had also submitted an EOI for getting a new license for monitoring and tracking transit cargoes.

It is worth mentioning that SRO 413/ 2012 directed the authorities to conduct the audit of the system of tracking companies every year. Despite rules requiring annual audits since 2012, the first system audit of TPL Trakker wasn’t conducted until 2023.

This SRO was enforced in 2012 on the recommendations of FTO in its annual report on the ISAF container scam in 2011 that led to the detection of over Rs. 60 billion worth of 28802 commercial and 3542 ISAF/ NATO missing containers.

Astonishingly, SRO 413, which remained enforced from 2012 to 2023, has no provisions for a customs data bank for storage of the data generated by the tracking company and for customs monitoring software for monitoring the performance of the tracking companies however, these provisions have now been inserted in the amended SRO 996, issued in 2023.

With allegations of rule-bending to favour one of the influential tracking companies, the definition of ‘conflict of interest’ was conveniently modified; however, no amendments were made to prevent future monopolies – raising eyebrows about the true intentions behind these changes, industry experts said.

As the 90-day emergency period ticks away, the industry holds its breath. Will this interim tracking arrangement ensure protection for the country’s transit trade, or are we witnessing the creation of an even bigger crisis?

The customs department’s hasty approach has raised serious questions about regulatory competence. They have not just changed the tracking system but started gambling with transit trade operations, industry experts said.

The transit trade sector is currently facing serious challenges: inadequate digital security measures, escalating costs, and uncertain transition timelines - the TPL Trakker license should have been extended until new licensing completion for smooth transition and to avert all the above challenges.

A comprehensive transparent solution is needed after this arrangement not only to resolve the country’s transit trade monitoring challenges but to provide a level playing field to all the stakeholders, industry experts said.

Copyright Business Recorder, 2025