Pakistan, with 155 million people, has a reasonably developed transport infrastructure
Road transport is the backbone of Pakistan's transport system. The 9,574 km long National Highway and Motorway network, which is 3.65 percent of the total road network, carries 80 percent of Pakistan's total traffic. Over the past ten years, road traffic, both passenger and freight, has grown significantly faster than the national economy. Currently, it is accounting for 91 percent of national passenger traffic and 96 percent of freight.
Port traffic in Pakistan grows at 8 percent annually in recent years. Two major ports, Port Karachi and Port Qasim, handle 95 percent of all international trade. Port Gwadar, which was inaugurated in March 2007 and is being operated by Singapore Port Authority, is aiming to develop into a central energy port in the region. 14 dry ports cater to high value external trade.
Pakistan Railways (PR) has a broad gauge system (with a small network of meter gauge in the South East). The network consists of the main North – South corridor, connecting the Karachi ports to the primary production and population centers in Pakistan. The track is in good condition with an axle-load of 23 tons and maximum permitted speeds of 100/110 kph.
There are 36 operational airports. Karachi is Pakistan's main airport but significant levels of both domestic and international cargo are also handled at Islamabad and Lahore. Pakistan International Airlines (PIA), the major public sector airline, though facing the competition from a few private airlines, carries approximately 70 percent of domestic passengers and almost all domestic freight traffic.
The transportation sector accounts for about 10.5 percent of the country’s GDP and 27.4 percent of Gross Fixed Capital Formation (GFCF) in FY06. It provides over 6 percent of employment in the country and receives 12 to 16 percent of the annual Federal Public Sector Development Program (PSDP). Government agencies dominate the sector.
Although the sector is functional, its inefficiencies with long waiting and traveling times, high costs, and low reliability are dragging the country’s economic growth. These factors also reduce the competitiveness of the country’s exports, increase the cost of doing business in Pakistan, and constrain Pakistan's ability to integrate into global supply chains which require just-in-time delivery. The poor performance of the sector is estimated to cost the economy 4-6 percent of GDP each year.
Over half the national highways network is in poor condition, and the road safety record is poor. The country’s truck fleet is mostly made up of obsolete, underpowered, and polluting vehicles, and trucks are often grossly overloaded. Truck operating speeds on the main corridors are only 40 – 50 kph for container traffic, half of the truck speeds in Europe. For trucks carrying bulk cargoes, the journeys take 3-4 times longer than in Europe.
The productivity of PR’s freight services is about 1/8 of Chinese Railways, 1/3 of Indian Railways (IR), and half of Thai Railways, a network of comparable size. In addition, PR continues to cross-subsidize passenger services from freight services, resulting in non-competitive freight rates over road transport. In contrast, China rail is 2-3 times cheaper than road. As a result, the PR has a very low and stagnant market share, carrying less than 10 percent of passenger traffic and 5 percent of freight.
Port charges have been reduced to slightly above international average levels. With the implementation of Pakistan Customs Computerized System (PACCS), the customs clearance time has been reduced from 4-5 days to less than 24 hours in Karachi International Container Terminal (KICT). PACCS was rolled out to the three other container terminals in December 2006. The free storage period was also shortened from 7 days to 4-5 days. Yet, the Container dwell times – 5-6 days on average - are still above the international standard of 3-5 days, thus reducing the capacity of container terminals to less than their potential. In addition, the ports’ limited drafts - at 10-12 meters - keep the latest and most efficient ships from calling.
There are restrictions on entering the market of international and domestic air transport. The government’s close involvement prevents PIA from operating on a strictly commercial basis. All these constraints contributed to the slow growth of air transportation. The passenger volumes in terms of passenger kms were just one tenth of rail service and one hundredth of road service. During 1995 and 2005, the average growth rate of export freight by air was about 7 percent, while the growth rates of import freight by air and domestic air freight were 3.4 percent and 3.8 percent, respectively.
Key Government Initiatives
There is growing recognition within the Government of Pakistan (GOP) that the sustainability of economic growth is closely linked to the efficiency of its transport system. To support sustained growth and increase competitiveness, the GOP is taking a strategic and holistic approach to the transport sector and has launched a major initiative to improve the trade and transport logistics chain along the north-south ‘National Trade Corridor’ (NTC) linking Pakistan’s major ports in the south and south-west with its main industrial centers and neighboring countries in the north, north-west and east. Together the ports, road and railways along NTC handle 95 percent of external trade and 65 percent of total land freight serving the regions of the country which contribute 80-85 percent of GDP.
The main objective of the NTC initiative is to reduce the cost of trade and transport logistics and bring it up to international standards in order to reduce the cost of doing business in Pakistan and ultimately enhance export competitiveness and the country's industrialization. The National Trade Corridor Improvement Program (NTCIP) consists of key policy reforms along with a comprehensive investment program to be implemented over the current Medium Term Development Framework (MTDF) period – 2005-2010.
The key NTCIP policies would:
Lead to modern and streamlined trade and transport logistics practices ;
-Improve port efficiency, reduce the costs for port users and enhance port management accountability ;
-Create a commercial and accountable environment in Pakistan Railways and increase private sector participation in operation of rail services ;
-Modernize the trucking industry and reduce the cost of externalities for the country;
-Sustain delivery of an efficient, safe and reliable National Highways system; and,Promote and ensure safe, secure, economical and efficient civil aviation operations and boost air trade .
The Government is in an advanced stage of preparing a consolidated business plan for NTCIP. This plan would be the formal translation of the holistic approach decided by the Government and the single consolidated document of the reforms, the investments, the expected impacts, the resources available and financing sought. A preliminary estimate of this investment program totals US$6 billion during the next five years.