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PAKISTAN’S INTERNATIONAL FREIGHT FORWARDING & LOGISTICS INDUSTRY & ITS REGIONAL CONNECT.
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PAKISTAN’S INTERNATIONAL FREIGHT FORWARDING & LOGISTICS INDUSTRY & ITS REGIONAL CONNECT Pakistani ports are a gateway for the not only its own population of 170 million people but also represent the potential to be the natural gateway for the 20 million people in Afghanistan, 30 million in Central Asia and the 30 million in Western China, altogether an economy of 250 million people.
Basic transport infrastructure: • Sea (shipping services) • Air (airfreight services) • Land (road transport assets) • Railways (rail freight) • Waterway (rivers & canals) • Pipe Lines (oil & gas transport) • Transmission Lines (energy transport)
Background: In early 2004 we approached the Government and mutually explored the merits of addressing the development of the country’s Logistics sector, several presentations were made resulting in a series of coordinated efforts. We identified the need to quickly create the necessary institutions as our first big challenge. Industry’s initiative: In mid 2004 we setup the “International Road Transport & TIR Commission” at the ICC-pnc and it became the member of IRU hence also the guaranteeing national organization for the implementation of the TIR Convention. In December 2004 we set up PIFFA – Pakistan International Freight Forwarders Association. A set of “Standard Trading Conditions” were adopted and PIFFA got membership of FIATA.
Government response: We then worked closely with the Government of Pakistan and got support from them for our proposals & ideas. We perused coordination with the World Bank to take these initiatives further. The World Bank started working with the Government on infrastructure development. In August 2005 the Government announced the formation of the National Trade Corridor programme. The project dealt with the upgradation of the entire logistics & transport infrastructure & services chain starting from deepening the port channels, setting up of deep draft berths, planning cargo villages at the seaports & airports, expansion of the road & highway networks, creation of new linkages, revamping of the Railways freight section, setting up container freight stations & establishing new customs stations on our northern border crossings. On the service side it covered revamping of the entire customs procedures including introduction of fully automated processing and the IC3, encouraging the freight forwarding sector i.e. PIFFA to streamline its rules & procedures and a accreditation based mechanism process was put in place.
The market: The service providers offering the logistics & transport services had limitations in the size of their economy. A World Bank funded survey conducted in January 2005 determined the annual turnover of the countries “Freight Forwarding Industry” at approx Rs 45 billion, this mainly included afreightment agreements contracted in Pakistan for exports of sea & air shipments. So we approached the Government for some quick actions. • Freight Forwarding Services • Trucking Services • Warehousing Services
National connect: The fast and cost effective delivery of produce and products within the country has been missing. We have an abundance of horticultural products, however more than 40% goes waste due to lack of proper reefer transport services and inadequate cold storage facilities. The Government was advised to provide supporting capital investment for infrastructure development. Such initiatives would then draw interest and investment from the logistics service providers .
Regional connect: With the countrys own population of 170 million and after including the region, it adding up to 250 million. The whole region is still not connected by proper logistics, therefore the potential to develop connectivity is huge. Cashing in on its geographical advantage in the region, Karachi’s gateway potential can be optimized by pushing for a vertical connect between Karachi’s wharfs and Central Asian’s bazaars.
HR availability: PIFFA set itself the goal of training the forwarders towards achieving an International standard of professional efficiency and performance. PIFFA sought technical support from the FIATA Foundation, FIATA delivered a TOT course in November 2006 at Karachi. The local team then developed a course of 10 modules with a teach-time of 240 hours. The course was validated at the FIATA Congress in Dubai in October 2007.
Beauracratic spread: At the Government level Pakistans Logistic expanse is spread across 7 Federal Ministries. It is now needed of the Government to put all freight transportation & logistics matters under the banner of a single ministry, the “Ministry of Freight Transport, Logistics & Ports”.
To sum up the industry today: The entry of the first “International Freight Forwarding” companies was around 1980. The next 20 years saw a steady growth of this industry. Today the sector consists of around 600 maybe 700 organizations. 450 companies are members of PIFFA and provide all types of logistics services to Pakistan's trade. Transit traffic to Afghanistan, commercial as well as military cargoes, are moved on a daily basis, however the ratification of the TIR Convention is still awaited. Meanwhile not to long ago Pakistan railways ran its inaugural train from Pakistan to Turkey.
The early bird: It is no doubt a difficult environment but companies willing to brave the opportunity by engaging will carefully selected local partners will prosper.
