Country needs logistical overhaul


He demanded that country embark on a logistic revolution as transport related costs stand at over 38 percent, which is uncompetitive in comparison to the logistics cost of six percent in Japan and the US and in the case of Far East countries like Thailand it is only 16 percent. Inland water transport has been considered the most viable solution of transportation problems, while railways are perceived another option, but both options are not feasible in Pakistan’s case because we don’t have enough water in our rivers.
This logistic cost is also the key reason for the failure of Gwadar port, where the government is incurring Rs 2400 per tonne as the subsidised cost due to non-availability of hinterland connectivity while the cost from Karachi to Lahore is Rs 400 per tonne, he added. Captain Shah has also served as Gwadar Port Chairman and Member Board Port Qasim Authority. Currently he is a Member Board of Governors World Maritime University Malmao (Sweden) and Member IMO Secretary General’s Panel of Experts, London.
Recently, track access policy has been designed for railways to involve the private sector in making this sector efficient but this would be only helpful if the railways are run along professional lines, he noted. He pointed out for example that in the case of Prem Nagar, which is 40 kilometres away from Lahore, Inland Container Depots (ICD) have been established by the Pakistan International Containers Terminal (PICT) and Qasim International Containers Terminal (QICT) in order to support both export and import.
But these ICDs should be used for transshipment and through Indus Trade Corridor Project he noted that we must start to build inroads in Central Asian Republics (CAR) with Lahore as the main point. But currently, he noted, we are only transporting to Afghanistan which has limited potential. He was hopeful we even could reach as far as the western provinces of China, but for that the Indus Corridor Project should be implemented.
Captain Shah was of the view that we failed to develop our infrastructure, and had allowed Iran to develop a port at Bandar Abbas and tap Pakistan’s business potential, so that port in Iran is now a regional hub for CARs in transshipment. Elaborating on the state of the neglected ports and shipping sector, he said they are economic drivers of any country and if they fail to produce desired results, the economy of the country would also be affected. About the reasons of sluggish growth of this sector he said that now a days borrowing rates have increased that is why people don’t buy much inventory, while transit time and port efficiency are both mutually required too to make the ports efficient.
He candidly noted that with containerisation and terminal operations, we received good results in comparison to India that handled only six million TEUs last year while we handled 2.1 million TEUs, which is quite an achievement if we consider the population of India.
But this would be detrimental in long run if we only remain focused on handling captive cargo, so Pakistan must gear up to start transshipment and act as a regional hub as the other international ports are doing like Colombo port handles only 30 percent in captive cargo and earns through 70 percent transshipment, he added.
And for transshipment we need a deep water container port to berth bigger vessels because our current ports are only feeder ports and no mother vessels come to here as the new generation vessels require deep water draught, he said. Shah lamented over the inefficiency of the port authorities who have failed to complete the country’s first ever deep water container project. He informed that Pakistan commenced deep water works in 2006 and India copied our model project in 2008 and even started operations in 2011 near Cochin Port but we still lag far behind in our own deep water project.
Our deep water port was to be made operational in 2009 as per contract documents, but this has not been the case despite the fact that all surplus funds of Karachi Port Trust (KPT) amounting to around $1.0 billion was invested in this project, he stressed. On the shipping sector of the country, he said that Pakistan has only one shipping company that is Pakistan National Shipping Corporation (PNSC) in the public sector and it is to be noted that we had 11 private shipping companies prior to nationalisation policy.
It was also noted that it seems very unlikely that a new company in private sector would emerge due to the high prices of vessels, yet this could only be done if banks finance the private sector with low financing rates as Indian banks provide four percent finance assistance that resulted in the starting of some 15 to 20 private shipping companies in India. Talking about the benefits of private shipping companies, he said they boost overall activity.
He also expressed sadness that with no private shipping lines we are completely reliant on foreign shipping companies. It was also pointed out that Pakistani businessmen pay over $5.0 billion annually to the foreign shipping lines in terms of freight rate. Similarly PNSC is a huge beneficiary of the Pakistan India Shipping Protocol signed in 2006, and this shows that we can increase our business potential through better policies, he added. Since he is a former Chairman of Gwadar Port Authority (GPA), he said there is no conspiracy behind the non-functioning of the port, but the only issue is the non-development of hinterland connectivity.
The port was conceived for Afghanistan cargo, but due to unavailability of hinterland connectivity and non-linkage of any to the port it failed, he added. He said that Gwadar Port should be operated by our own people and this port could be easily run in captive cargo capacity. On sea piracy he said it is going to stay because Navy has arrested all the pirates under act of war but the pirates are tried in the courts under Geneva Convention. He informed that a total of 2,000 pirates are operating while 1,500 have been released so far due to this flaw in the law and urged that piracy be tried under criminal law.
While suggesting efforts to build up the ports and shipping sector of the country, he said proper technical knowledge must be imparted and professionals be placed at the key posts. He expressed the need to establish a think tank in the ministry that will include a steering committee comprising of all stakeholders so that the sector can achieve maximum benefit.