The term logistics and transportation enunciates the entire network starting with the planning, implementing transfer and storage of goods and services from the place of raw material, manufacturing (termed as point of origin) to the consumer/household i.e. the point of consumption. This network has the most critical role in the economic development of a country because, without a seamless logistics setup, the movement of goods and services across the different areas from production to consumption business cannot flourish.
Logistics also helps in improving the trade account of a country and the creation of employment. In other words, the logistics industry boosts the overall economic development of a country. In terms of international trade by having efficient and safe transportation and storage of goods facilities, it helps to reduce trade barriers and foster healthy relations between neighbouring countries thereby making life easier for the business community. This, in turn, increases the capital account and reduces the dependency on international lenders like the IMF and World Bank, a challenge for all developing nations alike.
As discussed above, the logistics industry also provides a major source of employment in many countries. Due to the complexity of the involved roles, it provides a variety of jobs, including transportation, storage and warehouses up to the commercial and retail distribution network. This helps to reduce the unemployment rate of the country and resultantly boosts the overall economic growth. Efficiency is the key in this industry, therefore having a proficient network that reduces the delivery time helps in the reduction of the cost incurred for transportation, storage, delivery and increases the overall reliability of the supply chain.
Developed countries employ a method called “just-in-time” inventory which is only possible if there is a reliable supply chain network. Foreign Direct Investment (FDI) is directly related to the logistics structure of a country, having logistics infrastructure, such as ports, airports, and highways which help to improve connectivity and access to markets. This can help attract foreign investment, boost exports, and stimulate economic growth. Overall, logistics plays a very vital role in the economic growth of a country. In short by facilitating the business, creation of employment opportunities, improving efficiency, and developing infrastructure, logistics can help to drive economic development and improve the standard of living for people in a country.
Depending on the needs of the business and the type of goods being transported, Pakistan has several types of logistics networks available for use. The most widely used but most expensive is the road transport. Pakistan has a very widespread road network that connects all the major and minor cities across the country. Road transportation is mainly used for the movement of goods within the country, particularly for B2B and B2C. The major concern with road transport is that it is highly affected by congestion, security concerns and the deplorable road conditions of our country, particularly after the recent flooding which wiped off a lot of roads in interior Sindh. Presently Pakistan has 30 domestic and international airports that offer air cargo services for high-value and time-sensitive goods, such as electronics, pharmaceuticals, and perishable items.
In addition to air transport, Pakistan ports namely, the Karachi Port (KICT), Port Qasim (also in Karachi) and the Gwadar Port (developed as part of the CPEC project). These seaports are primarily used for the import and export of commercial and defense goods and are all connected to major international shipping routes. Additionally, during the recent few years, to facilitate the oil and gas industry, the government has made oil pumping pipelines that allow the transfer of oil and gas from the shipping vessel directly to the refinery Pan-Pakistan. These pipelines provide a crucial and cheap life support system for the country and act as a strategic tool for the economic development of Pakistan. Additionally, they are contributing to the Government’s Finance Ministry through billions in the form of import duties, levies, taxes and cost savings.
In retrospect, during British rule in Pakistan, the logistics network was developed to support the British administration and the transport of military personnel and administrative support. The British government invested heavily in infrastructure development, including roads, railways, and ports, to improve the transportation of goods and people across the country. The Grand Trunk Road (GT Road) is a prime example of one of their projects. The government constructed a gigantic network of railways throughout India, including present-day Pakistan, which helped to facilitate the movement of goods and people across the country.
In addition to railways, the British government had also invested heavily in the development of seaports, which were important for the transportation of military personnel as well as merchant cargo. Karachi (previously known as Kolachi), in present-day Pakistan, was one of the major ports developed by the British, which became an important hub for trade and transportation of goods. The port developed by the British is still quite active and laid down the basis on which our present-day CPEC and KICT are developed and have made this city the economic hub of modern Pakistan.
In the Pakistani context, the future of our country lies heavily in the development of logistics infrastructure. We are blessed to be neighboured by landlocked countries like Afghanistan, Tajikistan, Kyrgyzstan and have China which is the primary benefactor of CPEC, as it will reduce the transit time by many days, so if our transport and logistics network is improved, we may be able to replicate the success that is enjoyed by Dubai and Hong Kong. Presently, in addition to the ongoing CPEC following projects are in pipeline completion which may take our country one step closer to economic independence. Up-gradation and dualization of ML-1 and establishment of Dry Port near Havelian, up-gradation of D. I. Khan (Yarik) – Zhob, N-50 Phase-I, KKH Alternative Route Gilgit-Shandur Road, Realignment of KKH Phase-I Thakot – Raikot Section, Peshawar – D. I. Khan Motorway, Awaran – Khuzdar Road Section (M-8), Dir Expressway, DTMB-A (Digitalization of the existing three sites of PTV), Mirpur-Muzaffarabad-Mansehra Road, Karachi Circular Railway, Mashkhel – Pangur Road, Quetta Mass Transit and the Greater Peshawar Region Mass Transit (source: https://cpec.gov.pk/infrastructure) amassing to a total of over 4000 kms.
To look at the large-scale economic benefit of the logistics sector to the overall economy of a country, we need to look no further than our neighbor China which after investing heavily in the development of its logistics and transport infrastructure since the last 60+ years the nation is now the world’s major goods and services supplier.
Efficient logistics has been the key factor for its exponential economic growth. China has the world’s most complex network of air and sea ports along with an endless network of highways which has made the transport of goods across the country and the world much cheaper and more efficient for its business community. Even with all the massive development China has initiated a 5-year plan that aims to connect the country with all the major routes of the world, with CPEC just one item on the list.
To be in the same league as our neighboring countries, Pakistan would have to bridge the raw material suppliers to the industry and ultimately to the ultimate buyer (local and international) efficiently and quickly. This can only be possible if our government completes the projects timely and embarks upon further developments.