Pakistan’s supply chain dilemma: Logistically wrong policies

Transport and logistics being important component of supply chain management play a vital role in the modern economy but in Pakistan, this sector has been facing severe challenges owing to the lack of innovative policies and vision of the government.  

Pakistan has kicked off the China Pakistan Economic Corridor but, unfortunately, it considered that a mere road construction across the country will solve all the issues related to the logistics sector.  On the other hand, the developed countries mainly focused its policies on the logistics industry and gave it a proper status and their progress is visibly playing a vital role in the modern economy. 

Pakistan’s logistics and transport sector depend upon railways, roads, ports, and air cargo. Railway – despite its growth at snail’s pace – is the single major mode of transport for the public sector. Recently it was discovered in a news story that as many as 141 out of a total 474 diesel-electric locomotives of Pakistan Railways are not in working condition and thus it creates difficulties in smooth train operation across the country. “The proposal for the rehabilitation of these over-aged/damaged locomotives is under process through public-private partnership on a build-operate-transfer basis,” a railways ministry official told APP.

In addition to that lack of sufficient railway track coverage and old relatively slow trains with poor quality freight containers, rail freight today makes up only 6 percent of all goods carried in Pakistan. Roads by comparison cover the entire area. 

Pakistan stood at 122 out of 160 countries on the Logistics Performance Index report in 2018.  According to the Economic Survey 2018-19, the National Highway Authority network consists of 47 national highways, motorways, expressways, and strategic roads. The total length of this network is 12,743 Km. Overall the NHA records showed that Pakistan has over 264,000 km of roads and these are secondary roads connecting small towns. According to National Highway Authority Pakistan has more than 264,000 kilometers of road networks on which 90 percent of all internal freight movement occurs. Roads carry a major chunk of it which is almost 94 percent of the freight traffic in the country while the railways carry around 6 percent, and airports are inconsequential owing to the higher freight cost.

This burden on road channels has caused traffic congestion, pollution and, wear & tear of roads which is compounded by overladen old trucks used by the majority of truck owners. Road transport service bears a huge cost to the economy due to imported fuel. Almost 35% of the fuel is consumed by the transport sector.

The government of Pakistan holds major responsibility for the neglect in this sector, as it has failed to develop the railways' sector and other alternatives to lessen the burden on road transport.

Over 0.3 million trucks are operating in Pakistan and the majority of these are outdated old trucks with rigid suspensions, limited speeds, and less economical in fuel consumption which makes them highly unproductive in terms of time and cost. Most of the truck owners have undocumented trucks who do not meet obligatory regulations, and owners are forced to opt for overloading.

This soaring number of road accidents and spoilage owing to time holdups and causes damage to roads, bridges, and highway infrastructure. This poor quality of fleet trucks and the absence of a comprehensive regulatory system has not only reduced the exports but has resulted in a poor ranking of Pakistan’s Logistic Performance Index. Similarly, the fleet carriers are dominated by small firms. According to details, the relative size of firms in the road transport industry is 68 % for small, 25 % for medium, and 7% for large size firms. 

A senior analyst and expert in the field of supply chain management, Mr Aamir Iqbal Malik who is also the CEO of Time & Tune Freight Solutions, is striving to create and national logistics platform through which government can digitalize the trucking and transport industry for a suave and under surveillance trucking operations on the basis on international standards. 

Lamenting on the current logistics situation in Pakistan Professor Aamir said that a transport ministry is the ultimate need of the hour for the logistics industry. It requires key policies keeping in view the supply chain requirement of Pakistan. He terms supply chain as an emerging field and foresees the road to progress through this sector.  He said that CPEC is a big challenge and we are unprepared to comply with the requirement of this gigantic project as far as the logistics in Pakistan are concerned.  He decries that national logistics cell hasn’t stepped forward as an institute and only fulfills the requirement of the corporate sector. He suggests that it should include other logistics players and Small and mid-size enterprises (SMEs) under its umbrella. He said that NLC carries a fleet of 200 vehicles which is insufficient to fulfill the logistics needs of the entire country.  Only the government isn’t responsible but the top companies have been too lethargic in this regard which also increased the problems. Aamir said that top companies should have invested in the fleet sector to lessen the burden on the local transporters. Over the years these tops forms relied on the national and international companies for transportations and cargo services instead of investing and building its warehouses and fleet services. 

Pakistan's government has also failed to implement the road compliance policy.  The government recently tried to implement the NHA road management compliance which was slammed by the traders and transporters. The problem was that the government introduced the policy without even negotiating with the transporter and traders and it failed to chalk out a feasible plan which was productive for both parties. 

He urged the business community to come forward and invest in the transport sector. He said that local businessmen should start building more warehouses and invest in fleet management as this is the only thing we can carry in the future for a smooth and swift supply chain infrastructure.  Amir said this while fearing a huge demand and supply gap with regards to CPEC as a lesser number of fleet and transport vehicles including low dependency on railways will lead pose a serious challenge.  Considering the significance of different kinds of logistics costs, it is suggested that the policymakers of the manufacturing companies in Pakistan should contribute extensively towards reducing the cost of logistics operations.  A strong logistics industry is essential to strengthening exports by removing supply chain inefficiencies in bringing raw materials, products, and finished goods to the market.