A slow but steady turnaround in the logistic sector is in the making. Relevant experts project eight per cent growth this fiscal year, up from a mere 3.4 per cent recorded during 2012-13.

They attribute the incremental growth to improved participation in the logistic industry by the private sector, which acknowledges that its hesitance to invest in modernising transport facilities is partially responsible for the bottleneck in the country’s growth and development.

Currently, the logistic cost in Pakistan — at about 30 per cent of the total product cost — is higher than that in its competitors. This is contributed, among other factors, by the disproportionate dependence on costly road transport. About 96 per cent of merchandise is moved by costly trucks.

The logistic sector is marked by poor highway conditions; underpowered, slow and obsolete vehicles; poor freight rail service; long customs clearance and container dwell time at ports; inefficient air freight system; and a rudimentary supply chain system that fails to supplement the strength of varied transport modes into an integrated system.

The public sector has failed to develop effective railways, internal waterways, reefers, and storage, port and shipping facilities. It is not able to check the vested interests from crowding out efficient businessmen, thus compromising the country’s long-term development interests. Transportation inefficiencies, which entail high cost and low reliability, render the country’s exports uncompetitive.

“The public sector is lacking, but the private sector can also not be absolved of its responsibility for insufficient investment in the logistic sector. The development partners are supportive. The Opic is ready to provide finance at three per cent. Where are the takers,” Majyd Aziz, President MGH Group of Companies, commented.

“Some years back, six businessmen from Sindh and Punjab joined hands to launch a 1,000-truck company with a modern setup of stations equipped with mini workshops every 200 miles along the route. It involved a sizable investment from each, but the idea fizzled out,” Majyd recalled.

According to the latest Economic Survey of Pakistan, transport, storage and communication enjoy the second biggest share of GDP at 13.7 per cent, next only to the retail sector. The collective contribution of the services sector — at 57.7 per cent — is more than that of agriculture and industry combined.

The thrust of demands of a transforming economy is said to be loosening the grip of vested interests and driving policymakers towards logical policy options, thus paving the way for private businesses to invest in the logistic sector.

Trade and transport experts attach high value to, what they consider, the long delayed decision of the last government on the train track access policy, which has offered an opening for the private sector to partake in the revival of the most economical mode of goods transport: Pakistan Railways.

“The development of logistic infrastructure involves huge long-term capital investment. Businesses are waiting for transparent policy guidelines from the Nawaz Sharif government to move ahead with their plans,” Haleem Siddiqui, Chairman of the Marine Group of Companies, which is setting up a second private container terminal at Port Qasim, told Dawn.

“There are many international logistic companies looking at Pakistan with interest. As soon as the business environment improves, I expect a rush of investors who understand the potential and would like to capitalise on it. I, for one, hope that local businessmen get an even playing field, unlike in Gwadar Port, which was handed over to the Singapore Authority. Ten years later, it was handed over to China. The project has yet to take off,” he said.

The revival of freight train service by Pakistan Railways last week, after two years, rekindled hope of investors waiting for an opportune time to peddle into the space in collaboration with overseas trading partners and to capitalise on the demand-supply gap in the logistic sector of the country.

And this did moderate the adverse effect of the World Bank’s decision to abandon the trade and transport facilitation project in Pakistan, as it cancelled $19 million of the $25 million it had pledged for implementation of the National Trade Corridor Improvement Project, and the modernisation of trade procedures and practices by its affiliate, the International Development Association, because of unsatisfactory progress.

“Hubco is switching to coal. By 2016, it will require six million tonnes of coal per annum. This means 20,000 tonnes of imported coal will have to be transported upcountry every day. It would serve well if the government treats that as the target time for making freight train efficient,” commented Tariq Haleem of Bulk Shipping, a name in the logistic sector.

A recent World Bank report, ‘Greening growth in Pakistan through transport sector reforms,’ confirmed that current patterns in the sector compromise development potential by generating inefficiencies that are costing the economy a high 4-6 per cent of GDP annually.

Pakistan’s low positioning on the current logistic performance index, which bases a country’s score on efficiency of custom clearance process, quality of trade and transport infrastructure, ease of arranging competitively priced shipments, quality of logistic services, ability to track and trace consignments and timely delivery, is found to be depressing by industry.

Capt. Anwar Shah, former DG Port and Shipping, told Dawn: “I am an optimist and hope that the private sector will take the lead in investing in the long neglected sector, and that the Nawaz government will facilitate their move. Without supplementing logistic infrastructure, all projections of export boom and high growth may falter.”