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Ports

Ports
The Ports sector essentially holds a monopoly over international trade, as over 95% is channeled through the two main ports-Karachi and Port Qasim. The growth in port traffic in the last ten years has been around 6% per annum. The berth capacity of these ports is considered adequate for the next twenty years but the approach channels need improvements. None of the two existing ports (KPT and PQA) have the required container handling facilities. There is still wide scope of containerization in the two ports.
On the land side, the main problem is the excessive handling charges and low labour productivity. As a result, the cash flow of the Karachi Port has dropped by 50% between l996 and l999.

For cargo, Karachi port is reported to be 1.5 times more expensive than Bombay, 4.5 times Colombo and 19 times Dubai. As a result, the shippers pay about Rs. 15.000 billion "extra" per year to the two ports-a cost which is passed on to the users.

Both the ports still have direct involvement in day to day operation. Experience has shown that the most desired course is the landlord concept in which the basic ports facility are provided by the public sector while all operational tasks such as stevedoring, piloting, etc are handled by the private sector.

There is serious lack of coordination among the two ports. Currently, both the ports tend of operate in competition with each other. With the creation of additional ports on Mekran Coast, the situation would be further aggravated. The problem can be overcome by creating a Supra Port Authority with both the ports under its policy control, which still maintaining day to day operational independence.

The third deep-sea port at Gwadar, on the Balochistan coast with an estimated cost of Rs. 20 billion, lacks economic and commercial viability.

Trade

Consistency in Policy & Incorporation of New Concepts
There was ambiguity and lack of clarity in the existing policy. there was need need to have a consistent and clear policy that sent clear signals to the private sector. The new policy framework should embody concepts such as the 'landlord concept' and the 'door to door concept' in service delivery.

Institutional Changes
There was lack of co-ordination and inadequate infrastructure which led to high port and cargo handling cost. there was a need to abolish the dock labour scheme and establish a National Ports Authority in order to make ports autonomous. All decisions with respect to ports would be made by the NPA without reference to other agencies like the Ministry of Finance, CBR, DG P&S, etc.

Simplification of Procedures
The current port procedures were complex and cumbersome and needed to be simplified. There was a need to undertake systematic documentation and computerisation of port handling operations.

Lack of Investment
Undertake capital investment for bringing the infrastructure up to international standards and introduce incentives such as duty free import of port handling equipment.

Private Sector Participation
There was need for greater autonomy in the sub-sector to encourage private sector participation, improve port productivity enhance efficiency in port operations and provide customer orientation.

Efficiency of Logistic Operation
Efficiency of logistic operations and in particular of the port interface, is critical for export competitiveness.
A comprehensive trade and transport facilitation agenda, addressing all procedural aspects of transport operations related to external trade activities, would be highly beneficial for Pakistan

Some of the important issues are
1. Shipment Delays.
2. Little or no coordination in services offered
3. Obsolete cargo equipment.
4. Ineffectual cargo management.
5. Unnecessary custom procedures, etc.

Road Freight Problems
Private trucking industry carries approximately 95 percent of the road freight traffic. The army-based trucking operation, the National Logistics Cell, created for emergency in 1978 by GOP to transport wheat and fertilizer from the port, carries the remaining 5 percent.

About 95% of the road freight traffic is not appropriately designed and powered.
Obsolete cargo transportation services and logistics add to the problems of congestion on the roads.
There is excessive overloading resulting and lack of enforcement of truck overloading and safety regulations.

Shipping

Shipping
The market share of the Pakistan National Shipping Corporation (PNSC) has dwindled over the years to only 5% of the national trade. Its' shipping fleet has diminished from 70 ships in the 70s to only 15 today. It has been consistently posting losses to the tune of half a billion Rupees annually.

Pakistan's private shipping sector, which was nationalized in the 70s, has not yet recovered, primarily due to lack of incentives and undue restriction on registration.

Coastal shipping along the Mekran coastal area is still far from being developed to any reasonable degree.

As a result, shipping which can be a great source of foreign exchange earning is losing this earning to foreign carriers to the tune of about 40 billion rupees per year.

The most crucial issues in shipping is the failure of the government to recognize that unlike any other mode of transport, the shipping sector is unique as its not encumbered by any bilateral agreements to allow it to call at any port. Any ship registered anywhere in the world, can pickup freight from any port and un-load at any port. This makes imposition of any kind of duty or taxes on locally registered ship totally un-necessary as it would only result in driving the ship owners out of the country in search of tax havens. To encourage shipping industry in the country, there should therefore be : (a) no duty/sales tax or any other types of tax on import/export of ships, their spares, other accessories, etc.

Need for Enabling Policy Framework
Shipping was the backbone of Pakistan's industry and there was need to enhance the capacity of the shipping sector and to introduce a greater degree of professionalism. There was need to re-orient the shipping sub-sector for international operations. There was need for the implementation of the Shipping Policy 1999 and for enacting legislation for multi-modal transport.

Role of Merchant Marine
The role of the Merchant Marine had to be acknowledged and a New Merchant Shipping bill had to be enacted which recognised this role and made appropriate provision for it.

Private Sector Participation
There was a need for growth of ships under the Pakistan Flag. In order to aid this process there was a need to encourage private sector investment, provide greater security for capital investments, simply procedures for ship registration and encourage participation in trade through international conventions.

Human Resource Development
There was need for increasing employment opportunities for seamen, improved training and education. There is need to encourage employment in the sub-sector through income tax free status of seamen's earnings abroad.

Lack of Full Capacity Utilization of Ports
There is lack of the full capacity utilization of the existing ports. However, there is also lack of specialized cargo handling equipment at ports and storage facilities for bulk cargoes.

Port Cost
The current trade facilitation regime is an area of high concern. There is need to reduce port costs at Karachi through improvements in cargo handling productivity, accelerated cargo and document clearance, and improved landslide access to the port.

Institutional Issues
There is lack of the appropriate mix of public and private sector partnership in the development and operation of ports and there is need to strengthen the Karachi Port organization through changes in institutional, managerial and financial structures.

Manpower and under developed Coastal Areas
There is an extreme shortage of trained manpower in the shipping sector. This is one of the main causes of its bad performance.
Coastal areas, are under developed, even the basic necessities of life are missing from there.

Local Monopolies
Competition conditions between ports, or within ports, need to be monitored by the public authorities to prevent the development of local monopolies and rent-seeking practices.

The Ports and Shipping sector essentially holds a monopoly on trade, as over 95% of the trade is channeled through the two main ports-Karachi and Port Qasim. Despite nearly 6% growth in port traffic in the last 6-7 years, the physical capacity of these ports is considered adequate as no major congestion is encountered. The main physical constraints may be the condition of the approach channels. On the ports side, the main problem is the excessive handling charges incurred by shippers due to inefficiencies and multiple charges. For a comparable cargo, Karachi port is reported to be 1.5 times more expensive than Bombay, 4.5 times Colombo and 19 times Dubai. It is estimated that the shippers pay about 15 bil Rs ($300 million) "extra" per year to the two ports-a cost which is passed on to the consumers and producers in Pakistan. he net effect on the economy of these inefficiencies at Karachi Port alone have been estimated to be around $850 million (42.5 billion rupees) per year.

Pakistan's shipping sector, dominated by the Pakistan National Shipping Corporation (PNSC) is another sad story. The market share of PNSC has dwindled over the years; currently it handles only 5% of the national trade. Its' shipping fleet has diminished and aged! With only fifteen, or so, ships remaining [vs. 70 ships in the 60s and 70s], it has been consistently posting losses to the tune of half a billion Rupees annually. Pakistan is currently paying about $800 million (40 billion rupees) per year to foreign shippers.