Trade boom prompts plan to revamp ports
Terminals need to boost their capacity to handle the expected strong growth in container throughput as exports and imports go through the roof
IT IS ABOUT 18 months since the affable Captain Tommy Jonsson took over the reins of GAC Shipping Pakistan. 'Ever since I have been here, business has been going through the roof.'
Of course, the steadily growing trade, which has jumped 21 per cent to 1.34 million teu (20-foot equivalent units) last year from 1.11 million teu in 2003, has put a lot of strain on the overall infrastructure. Congestion has been a problem at all three major box terminals in and around Karachi.
Container throughput increased to 1.074 million last year, a rise of 17 per cent from 916,660 teu in 2003, while the addition and reposition of empties took the corresponding statistics to 1.11 million teu in 2003 and 1.34 million last year, representing growth of 21 per cent.
The throughput was 801,391 teu in 2002, so the growth has been strong in the past two years. The major driver was imports, a 26 per cent rise to 633,696 teu last year from 501,956 teu in 2003.
By comparison, the increase in exports was modest at 6 per cent, to 440,866 teu from 414,704, the total value of the goods exported being US$12.1 billion, compared with the 2003 value of US$11.2 billion. The Ministry of Commerce has set a target of US$13.7 billion for this year.
The indications are that, with gross domestic product growth of about 7 per cent expected this year, Pakistan will further diversify its overall exports.
There are other exciting developments. About four years from now a new 'textile city' should start operations on the outskirts of Karachi. It should generate container volumes of 30,000 teu per month.
The bulk of this volume should go through the P&O Ports-operated Qasim International Container Terminal (QICT), due to the clear road to Port Muhammad bin Qasim compared with the crowded approach to Karachi. There is a lot of work that needs to be done in a short time to put the support infrastructure in place.
QICT chief executive Changez Niazi said: 'Capital dredging has to be done to get the channel draught increased to 13.9 metres from 11 metres so that mainline vessels make more calls at Port Qasim. That is the job of the port authorities and we have been pushing them hard.
'Our throughput increased by 48.6 per cent over 2003 to 495,454 teu in 2004, from 333,304 teu. Taking this phenomenal growth into account, we have accepted the option offered to us by the port authorities to invest in a second terminal that would require the building of two new berths and an investment of about US$110 million.'
QICT also moved last month to procure four hectares of land adjacent to its terminal to enable it to speed up the import delivery process. This should enable the terminal to solicit business from more lines.
Several factors have been responsible for the phenomenal growth of QICT, especially in the past two years. Increased volumes from existing customers, a massive growth in Pakistani imports and an only slightly less impressive growth in exports have been strong drivers of growth.
The domestic cotton crop, a cornerstone of the economy, has been very good this year, and cultivators are expected to reap a record 14 million bales during the season. There are good prospects of higher rice exports to the European Union due to the imposition of higher import duties on other regular rice exporters.
The major worry for Pakistan is the abolition of the quota system and a high anti-dumping duty on bed linen, the country's staple export product. The order books indicate that the export of certain other categories, principally knitwear, is not proceeding as per plan or target.
With trade forecast to rise to 1.6 million teu this year from 1.34 million teu last year, there are fears of further congestion that disrupted the ports of Karachi and Port Qasim bin Muhammad for extended periods in 2003 and last year.
The aggregate handling capacity of the three major container terminals - one state-owned and the other two operated on 20-year build, operate, transfer lease concessions by Hong Kong's Hutchison Port Holdings and British-based P&O Ports - is just sufficient to cover this year's growth. The lack of advanced planning on capacity expansion and equipment orders placed will only take the total handling capacity to 1.7 million teu. Next year could see the start of a major logistical nightmare.
The privately operated Karachi International Container Terminal and Qasim International Container Terminal have taken steps to improve efficiency and productivity by introducing online systems that have reduced cargo clearance time at the ports.