CPEC has drawn a lot of attention, a lot of it good, some of it bad. But given that CPEC’s end game is all about enhancing connectivity through enhanced transport network and services, a hard look needs to be taken at the current scenario in Pakistan.
At its peak in FY11, Pakistan’s transport of export service was $1.6 billion. In recent years it has gradually fallen below the $1 billion mark and was at $962 million in FY18. Previously accounting for about 30 percent of total services exports, the figure has now fallen below 20 percent.
While transport services are generally confined to physical infrastructure such as rail, roads and sea transport, they are augmented through facilities such as packaging and storage. It is the bundle of services from aggregate transport to logistics that determine the efficiency of this sector’s exports and therein lies the challenge since there are obstacles to overcome every step of the way.
Despite railways being theoretically cheaper and more efficient that roads, as in the case of most countries, it is the road network that carries 93 percent of the passengers and 94 percent of freight traffic as per a report by Ministry of Planning, Development & Reform. Roads are congested, overburdened and consume 35 percent of fuel, thus contributing to the import bill. On the other hand, railways run at a loss due to subsidised passenger traffic and declining freight business.
Karachi and Qasim ports have limited infrastructure and lack capacity to handle ever-growing traffic. The shipping industry is withering with fleet of vessel reduced to nine. The entire trade of the country is almost completely dependent on foreign ships. While Gwadar may be a solution of sorts in the long term, without ships the bulk of the revenue will go to the Chinese and so the contribution to Pakistan’s transport exports in the foreseeable future will be relatively low.
PIA carries 87 percent of passenger and freight traffic. Despite the expanding economy, there has been only a nominal increase in numbers. There is general awareness of PIA’s dismal conditions with high freight charges and inadequate cargo facilities aggravating the situation.
Numerous inadequacies result in higher costs of transport and logistic services than regional competitors. If CPEC wants to claim its position as kingpin of OBOR, these issues have to be addressed. Otherwise Pakistan will be left with mounting tons of debt and little earned to justify it.
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