New freight service

Published January 26, 2022

THE launch of a new railway freight service connecting the Karachi port with the industrial and commercial centres in the rest of the country is a welcome development and the first step — albeit an isolated one — towards turning the loss-making Pakistan Railways into a profitable company. Railway and port officials say the containerised cargo will be discharged from the ships and put directly on to a train that will deliver them to the customers at their factory gates in Multan, Lahore, Sialkot and elsewhere. The freight train will cover the distance between the port and its destination in Lahore in four days, which is not bad given the stopovers it may make and the rundown condition of the railway infrastructure. According to the railway minister, the new service will triple the container transport for Pakistan and make the railway, which has accumulated losses to the tune of more than Rs1.2tr over the last couple of decades, a profitable organisation in six months. Will it do so?

As noted, the new service will help PR somewhat improve its earnings and cut its losses. However, it would be naïve to expect it to bring the company out of the woods. At best, it signifies just the beginning of a long journey. Turning the company into a profitable entity will require the railway authorities to boost the share of freight business earnings to at least two-thirds of their total revenues. That is a huge ask given the unreliable railway infrastructure and competition from road cargo transporters like the NLC even if businesses are willing to shift to rail freight because of lower costs. Still, it can secure its monopoly over the movement of dirty cargo, which is costlier and cumbersome to transport long distance through trucks. Regaining the cargo business requires huge investment in improving its dilapidated infrastructure. Sadly, the cash-strapped government appears to have put all its eggs in the Chinese basket, hoping that Beijing’s promised investment of $6.8bn for upgrading ML-1 connecting Peshawar with Karachi would save the company. The project, nevertheless, has hit many snags. The worst part is that the government, fearing resistance from railway employees, seems to have put reform plans on hold until the Chinese money rolls in. That isn’t a prudent strategy. If the railway is to be put back on track, the government will have to invest heavily in rebuilding and rehabilitating the missing and broken infrastructure now besides implementing governance reforms.

Published in Dawn, January 26th, 2022

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