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Govt must engage with logistics industry

July 17, 2017

NOTWITHSTANDING the pros and cons of the multibillion-dollar China-Pakistan Economic Corridor (CPEC) initiative in public discourse, the fact is that China will not transfer benefits to Pakistan on a silver platter. These would have to be created and earned by Pakistan and its public and private stakeholders to make the best out of the opportunity.

After all, CPEC is a small part of Chian’s ‘One Belt, One Road’ programme that may last beyond a century and ultimately spread to the entire Eurasian region involving more than five billion people living in more than 100 small and big countries. Traversing tens of thousands of intra-continental kilometres, OBOR is anticipated to create hundreds of new cities on the way and become a corridor of economic power houses.

As such, it would not remain restricted to China and Pakistan but open up to the brutal competitiveness of the entire world and thus follow the principle of survival of the fittest.

CPEC will not remain restricted to China and Pakistan. It will eventually open up to the brutal competitiveness of the entire world and thus follow the principle of survival of the fittest

Therefore, CPEC is going to change the lives and cultures of inhabitants along the route. Border crossings, container codes, logistic services and infrastructure are going to be of uniform standards. That is an area where Pakistan has to focus now with full vigour to match competitors from China, Hong Kong and other areas to grab a fair share out of the enormous opening.

Logistics and related areas have to be upgraded and reformed to support an upcoming ecosystem of regional and international truckers, drivers, hostesses, warehousing, shipping and so on. While the country has around 1,200-1,500 freight forwarding agents and organisations, they are mostly of the subpar quality and obsolete to say the least. They are neither of the required axle load standards nor capable of taking the challenge.

Most of them operate small fleets of trucks and trawlers and do not meet international road standards. The recent revelation that up to 85 per cent oil tanker lorries operating in the country do not meet regulatory standards was just an eye-opener but the required action for their upgrade has been missing.

To be fair, the entire transport management system is so fragmented that it is covered by seven to eight separate federal ministries. Foreign and transit trade matters and standards belong to the commerce ministry; ships and shipping services to the Ministry of Ports and Shipping; airports and aviations to the Ministry of Defence; rails and roads to the Ministry of Communications; trucking, lifters and the likes to Ministry of Industries; rail freight to the Ministry of Railways; and customs affairs and border crossings to the ministries of finance and interior.

No wonder then, the trucking modernisation plan and a national transport policy approved in 2007 has yet to be implemented and we are yet to ratify and adopt international standards and conventions on transport of goods and products. It is estimated that almost 30-35pc of Pakistan’s own agricultural produce is currently being wasted because of transportation gaps and almost 2pc of GDP is compromised to logistic network.

It was in this background that Dr Salman Shah, former adviser on finance in the Musharraf administration, proposed last week that a national integrated logistic authority should be created to take forward hardware and software of the transportation and logistics infrastructure chain by hand-holding the private sector for an initial transition before the private firms take over the lead role.

Lessons also need to be learnt from the free trade agreement between Pakistan and China that has now become the major source of Pakistan’s trade deficit.

Obviously, the logistic advantage goes to the Chinese operators and Pakistan has to make concerted efforts for a meaningful improvement, not only on logistic facilities but also the products that could go to China, a wishful thinking in the given circumstances.

Pakistan needs a lot to improve from trade terminals upgrade to simplified customs procedures to reducing processing time and better management of expected increase in volumes of traffic alongside modernisation of the trucking industry compatible with international standards, adherence to axle regime and diversified fleet if they have to go deep into China.

For this to achieve, the government needs to engage in a meaningful manner with the logistics industry, listen to their issues, resolve their financing and working capital shortfalls through financial institutions and insurance companies so that truckers, freight forwarders and other related services are facilitated into entering joint venture partnerships with Chinese counterparts.

Published in Dawn, The Business and Finance Weekly, July 17th, 2017