Monday, November 13, 2017

‘Efficient logistics can give impetus to economy under CPEC umbrella’

By Razi Syed 
in BusinessOn November 14, 2017

KARACHI: Compliance of standards in the logistic industry would enable Pakistan to get huge benefit from influx of opportunities in the milieu of the China-Pakistan Economic Corridor (CPEC)) project.

Changes were absolute and would take place in Pakistan’s economic and logistics infrastructure. It is clear that logistics sector, in terms of transportation, will get a great boost as a result of influx of Chinese transporters. This calls for proper measures to be taken to safeguard local interest.

Improved transport and sound logistics services are two key factors in the promotion of economic development.

People belonging to the sector have stressed the need for an outstanding logistics and transport infrastructure so that goods and business in economic sector have speedy movement.

The CPEC has opened many vistas for logistics sector. Now more logistics projects will be set up and industries and their freight forwarding businesses will witness a boom. As the industries start producing, they will need storage facilities, transportation and warehousing and, for that, logistics companies such as National Logistic Cell, Leopard, TCS and DHL would be required to cater to changing dynamics.

One of the main reasons why the initial cost of the project increased from $46 billion to $57 billion is the addition of Chinese financing for Pakistan Railways and transport projects in Sindh, Balochistan and Khyber-Pakhtunkhwa. Although Beijing is paying a larger part of the CPEC bill through soft loans, commercial loans, grants and private equity investments, Pakistan is also required to contribute funds to transport projects.

The CPEC will make all efforts to improve Pakistan’s long-standing supply-side for the improvement of its power supply infrastructure and their export.

The NLC has already been in the lead in terms of lobbying for reforms and promoting national interest for Pakistani trucking industry. Agility Pakistan has already presented certain measures that not only safeguard interests but also promote the sector with initiation of the CPEC. Pakistan can take full advantage of this opportunity.

With the expansion of the trucking industry, certain laws would also need to be enacted to protect Pakistani companies so that they can govern conduct of truckers when they acquire the CPEC contracts. This primarily depends on the development of Pakistan’s capabilities in the sector of logistics, trucking and supply chain management through the functioning of regulatory frameworks and policies that can take this sector further and become the backbone of the CPEC and Pakistan’s economic development.

There is no doubt that Pakistan needs massive investment in its energy and transport infrastructure to end power outages, improve growth and create job opportunities.

The country’s roads, railways and seaports will then be in a position to provide easier access to overall market and this will promote trade.

Volvo has already signalled its plans and now MAN SE has also emerged as a new competitor, vying for the same market.

To service the various projects coming up under the CPEC, approximately an additional 100,000 trucks will be needed to transport the construction material. If the investment in the sub-sector project is not carried out well, the prices of transporting various materials will decrease, again leaving Pakistani exports at a competitive disadvantage and an indirect increase in the cost of the CPEC projects.

Along with several other development projects, Chinese businesses are also making their way into Pakistan. There are an increasing number of Chinese trucks and truck companies in the country. A number of Chinese trucks were witnessed at Pakistan Auto Parts Show held at Karachi Expo where Chinese truck makers also announced that many more buses were going to arrive in Pakistan to be used in mass transit infrastructures in various cities, including Karachi.

With this initiative in the transport sector, the demand for heavy vehicles is also growing and various manufacturers are rushing in Pakistan to capitalise on the opportunity.

One major focus would be on overloading of trucks as the additional weight is likely to cause damage to the roads that are and will become a part of the infrastructure necessary for the proper functioning of the industry.

The truck drivers would also need to observe disciplinary standards and their databases would need to be updated.

Published in Daily Times, November 14th 2017

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