Saturday, 19 November 2016

Has CPEC now kicked off? KHURRAM HUSAIN

NOW that a couple of hundred containers have been loaded onto two vessels at Gwadar port and dispatched to various destinations around the world, can we say that CPEC is up and running? The short answer is no. The long answer is not yet.
The convoy that brought the containers to Gwadar, and the ceremonial send-off at the port with the usual unveiling of plaques, was not a commercial endeavour. It was a forced push, mostly led by the FWO whose DG said he did it to help dampen some of the “despondency” that was beginning to surround the project. Fair enough, the despondency was indeed addressed and a point was indeed made that the roads and the port infrastructure exists to handle this volume of cargo.
But to get an idea of what it took to make it possible, consider a few details. First, the Chinese were apprehensive, feeling that it is not yet commercially viable, and the government too felt it was a little premature to undertake such a task. The Chinese actually aired their apprehensions briefly when Yuan Jianmen, the executive from Sinotrans, the company that arranged the convoy of goods from the Chinese side, said that “there is still much work to do, especially in certain regions” where people still need to be persuaded of the benefits that CPEC will bring for them.
Next the Chinese raised the point that there are not enough containers available on their side of the border for export shipment from Pakistan, since most of them are booked already, so a special consignment had to be arranged to go to China carrying Pakistani goods just so containers for the return journey would be available over there. The services of a businessman from Gilgit were utilised for the purpose of arranging this consignment of goods.
The convoy of trucks itself had a security escort involving more than a hundred personnel, and as many vehicles as there were trucks. In addition, there was helicopter protection throughout the journey, as well as drone surveillance from above. The convoy took more than two weeks to reach Gwadar, so stops had to be arranged for such a large number of trucks, which required sleeping arrangements, food and parking space. In some locations, even R&R (if you get my drift) had to be arranged for the drivers to incentivise them to take the less trodden path west of the Indus river.
From Quetta to Gwadar alone, the journey took four nights, with the fifth being in Gwadar. The route is barren and empty except for two small towns along the way (Panjgur and Turbat), with no maintenance facilities for vehicular traffic, no place to get food for the drivers, and no place to spend the night. The FWO actually arranged for proper ‘harbours’ for the trucks in four locations along the N85 highway using Alaska tents for sleeping and food brought from outside. It was quite a logistical feat if you can imagine the amount of space that number of trucks takes up, and that the size of the personnel travelling was in the hundreds (including security detail).
Clearly the roads are there for trucks to travel on, but it is not yet viable for commercial traffic to ply these roads to access Gwadar port. Add to this the distance. According to one person (a commercial party) that was involved in the arrangements, the western route taken by the trucks will never be viable for cargoes originating in Lahore or south of Lahore. That means it’s only viable for cargoes originating in KP, upper Punjab, Gilgit-Baltistan or China. Considering most of Pakistan’s export base is located around Lahore and south of Lahore, this means the route will only be commercially viable for a small number of Pakistani producers, or for the Chinese, who continue to harbour strong apprehensions on security as well as the costs of utilising the western route.
Of course none of this means that the road network should never have been built. It should be built. In time, it has to be expanded from the current two lane alignment to six lanes. The Karakoram Highway took almost three decades before it began to grow into a large commercial artery, and that process still has a long way to go before it reaches full bloom.
That is the point here. The roads being built under the CPEC connectivity projects are a long-term proposition. It will be a couple of decades before they become arteries for major commercial traffic, but when that begins to happen, it will definitely be a ‘game changer’ for Pakistan. Some unscrupulous real estate agents are already beginning to cash in on the headlines and trying to sell Gwadar property under the pretext that “trade has now begun, prices there are about to skyrocket”. Don’t fall for this line! Trade has not started at Gwadar yet.
At this point, it is important to start thinking of ways to literally push cargoes towards Gwadar, provided its cargo handling is reliable enough. So here is a suggestion. A large number of containers leave Pakistan every year completely empty because we have a trade deficit with the outside world, and since more is imported than exported, containers naturally tend to accumulate within the country. Empty containers are routinely shipped out of the country, and their transport and insurance costs are lower. In fact, almost half of the containers that went out of Gwadar port as part of this exercise were empty. Is it possible to make a rule that all empty containers must be shipped out of Gwadar from now on? This will help de-clog Karachi’s two ports, and push traffic towards Gwadar.
In any case, the exercise was a successful demonstration of the infrastructure built so far, but it will be many years before real commercial traffic begins to flow along it.
The writer is a member of staff.
Twitter: @khurramhusain
Published in Dawn, November 17th, 2016

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