PAKISTAN is losing its share in Afghan transit trade to Iran and India, as both these countries are developing infrastructure in and around the Iranian ports of Chabahar and Bandar Abbas.

The Afghan transit trade dropped by over 54 per cent in fiscal year 2012, as the number of imported commercial containers fell to 28,813 from 60,338 a year earlier.

This significant decline in transit cargo is attributed to major factors like revised transit trade agreement, insufficient infrastructure, additional taxation/extortion, poor law and order situation, and high freight charges. And the drop in Afghan-bound cargo has in no way impacted smuggling, as Bara markets across the country are thriving.

There is a negative perception about transit trade in Pakistan, which tends to ignore its contribution to diverse economic activities, from clearing and shipping services to unloading, trucking, transportation and other allied services, to the workforce that is engaged in the entire operation, and the movement of cargo containers upcountry.

The transit trade agreement with Afghanistan was revised in 2010, and became operative on June 12, 2011. Since then, transit containers witnessed a substantial decline owing to stringent conditions like furnishing of guarantees etc., to Pakistani authorities.

Some border skirmishes, like the Salala incident of November 26, 2011 following which Pakistan suspended transport of all types of Nato supplies (non-commercial containers) from Karachi to Afghanistan, also hampered trade. While the ban was on non-commercial containers, it also disrupted commercial imports.

Afghan importers complain about their inability to comply with the conditions of the new agreement, and have warned Islamabad, time and again, that they would divert their transit cargo to Iranian ports. But Islamabad did not pay any heed to these warnings.

Recently, more than 30,000 containers were held up at Karachi port for want of compliance of documentation. They were later cleared after the intervention of former prime minister Raja Pervez Ashraf.

The transit trade was below $200 million in 2001, but started rising sharply after the revision of the negative list in 2005. It touched $1.957 billion in 2009, before further shooting up to $ 2.5 billion in 2010-2011. But it plummeted to less than $1 billion a year later.

In the first nine months of the current fiscal year, only 21,125 Afghan cargo containers have been imported. This clearly reflects the diversion of cargo to Iranian ports, say informed sources.

From the facilitation point of view, Pakistan is reluctant to divert the transit cargo handling to Gwadar port on a permanent basis.

This can significantly reduce pressure on Karachi ports, and relieve importers from paying demurrages, as ships have to wait for weeks at outer anchorage for berthing. Even traders in Balochistan have demanded the same arrangement from the government.

However, the infrastructure issue is not only confined to the port, but also to poor roads and railway links upcountry, which causes delay in the transportation of the cargo.

The movement of cargo containers from Karachi to Torkham border and Chamman is also subjected to facilitation fees in the shape of ‘taxes’. Extortion money, mostly at check posts in tribal areas, ranges from Rs100,000 to Rs200,000 per container.

This adds to the cost of the cargo. Similarly, freight charges on containers of 20 and 40 feet, going from Karachi to Torkham, have also surged, to around Rs250,000 to Rs300, 000 per container.

In the past few years, many Afghan cargo containers were either put to fire or looted in the tribal areas, especially in Khyber Agency.

Finally, the movement of Afghan cargo came under vigilance of the Frontier Constabulary, Frontier Corps of Balochistan and Khyer Pakhtunkhwa, as well as Pakistan Coast Guards, Punjab and Sindh Rangers, and members of the Karakoram force, who were deployed to check smuggling activities.