CPEC: Potential Impact on Pakistan’s Logistics Industry

GVS Editors examine the opportunities and challenges CPEC Phase-II presents for Pakistan’s under-developed logistics and argue that unless country modernizes its logistics its dream to transform its economy with the help of CPEC’s phase-II and its SEZ’s will remain incomplete.

CPEC

CPEC, has now entered its second phase with emphasis on industrial relocation and creation of Special Economic Zones (SEZs); this has huge potential for Pakistan’s logistics industry provided the government and key institutions define a clear road map and come up with policies to implement it.

Government of Pakistan has created a dedicated “CPEC Authority”, which is headed by Gen Retd. Asim Saleem Bajwa as its Chairman. This is in recognition of the diverse initiatives related to CPEC and their multiplier effects.

If coordinated intelligently, the effects can complement Pakistan’s economic growth and socio-economic development in a big way, also enabling the country to enhance its geo-strategic significance by becoming an economic hub in the region.

Gen. Bajwa has served Pakistan with utmost distinction. He retired as Commander Southern Command (XII Corps) that is based out of Quetta and in terms of size, reach and scope is probably the biggest and most important command – especially in view of the geostrategic challenges that developed post 9/11.

Baluchistan’s coastal areas remain vital in terms of CPEC development and security – and Bajwa developed a deep understanding of challenges being faced by CPEC in its first phase (2014-18).

General had earlier distinguished himself by totally reinventing ISPR as a modern institution capable of engaging public, national and international media complete with audio-visual capacities. As Chairman CPEC Authority, all his skillsets will now be put to best possible use – and developing ideas for Pakistan’s logistics will be one of these challenges.

CPEC, from its inception, has been perceived as a game-changer by the people, media and institutions of Pakistan – however this “game-changer” impact needs vision, planning and meticulous execution. Pakistan’s Economic Survey 2018-19 indicates that around 28.2% of total CPEC investment, i.e. around US $14bn, is invested in the development of transport & logistics services across Pakistan.

Read more: China’s policy of industrial relocation

Around $6 bn will go on transport & infrastructure projects and a further $8-$9 bn will be absorbed by the ML-1 (Main Railway Line-1), the gigantic project that will connect north-south of the country through modern high-speed rail tracks and series of bridges and tunnels.

CPEC related investments in industrial centers and nine Special Economic Zones (SEZs) – along with development of cargo villages and trans-shipment hubs – will serve as primary macro drivers for the growth of logistics sector.

It is time for Pakistan’s Freight Forwarders and Transport industry to take the initiative and play significant role to reap the benefits of this route. For this to happen the logistics sector will need to develop internal integration and modernization with formal processes. This will not be possible without the guiding hand – direction and ideas – from the government.

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Much has been written, in Pakistani media, about the multiplier effects of CPEC as if it’s a done deal – like a Cinderella story. The reality is that for CPEC to become an effective trade route, which connects Pakistani businesses with Chinese centers of commerce, much intelligent work is needed at different levels – and transport and logistics is a big challenge in it.

A successful well-executed completion of the corridor can turn it into a gateway to trade between China and Africa and China and the Middle East. This can reduce distance of 12,000 kilometers for Middle East Oil Supplies to reach China.

However, this will depend upon the quality of infrastructure development that includes highways, connecting roads, rails, ports, dry ports, warehouses, modern efficient border terminals and trucking services etc– this list is endless. In 2015, a study estimated that financial impact of bridging the gaps in Pakistan’s logistics and freight forwarding industry can be potentially around $31 billion.

Read more: PM Imran Khan unleashes a dream: First CPEC SEZ takes off!

But challenges involve: Rapid inter-provincial connectivity, scaled down costs in transportation, effective linking of rural and urban areas, modern warehousing, effective trucking and freight train services and improved cold chain logistics to help Pakistan emerge as a reliable trans-shipment center in the region.

Summing up the much talked about multiplier effects of CPEC, repeatedly referred in lay press as the “Game Changer”, are not possible without successful initiatives to totally re-style the land transportation systems of Pakistan. This demands continuous research, innovation, invention and exploration of new unconventional means of transportation.


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