BMI's Executive Summary

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Speaking in October 2007, Prime Minister Shaukat Aziz told a delegation of visitors from Central Asia that Pakistan was seeking to improve transport and logistics links with China, Kyrgyzstan and Kazakhstan. Under the National Trade Corridor (NTC) initiative, his government was seeking to overhaul the entire logistics chain, physical connectivity and infrastructure, including expressways, railways, shipping, ports, and airports to bring them up to international standards. Development of the trade corridor through the new port of Gwadar and upcountry into China and Central Asia would help turn Pakistan into a transport hub for the region. A ‘quadrilateral agreement' between Pakistan, China, Kyrgyzstan and Kazakhstan allowed the landlocked Central Asian states and Western China to have direct access to China's ports. In our newly-released Pakistan Freight Transport Report 2008, BMI concludes that this will boost the freight sector. To take one indicator, we forecast that pipeline throughput, measured in million-tonnes kilometres (mntkm), will increase by an annual average of 8.1% in the next five years, up from 6.1% in the preceding half-decade.

The interplay of various factors, both positive and negative, underpin this forecast. Among the positives are Pakistan's expected strong rate of GDP expansion (an annual average of 6.8% is predicted for 2008- 2012) and rising energy needs, particularly for gas. Also important are the country's strategic location (between China and the energy sources of Iran and the Middle East), and the fact that important new projects, such as the US$7bn Iran-Pakistan-India (IPI) gas pipeline, are in a relatively advanced state of planning. Among the negatives are political unrest and uncertainty, freight congestion, under-investment and a poor operating environment. Opposition from the US, tensions with India and disagreements with Iran over gas prices could hold up the IPI project.

Looking at the freight industry across all modes, our forecast assumes that the country's ports – susceptible to bottlenecks and infrastructural delays – are able to cope with increased demand. On the land transport side, we expect that the market share attributed to the railways is likely to diminish, as there is no evidence of major investment in Pakistan Railway (such as network extensions). If it is to regain a share of around 4% of the overall transport sector, the rail network will need to be rehabilitated and maintained at a higher level than at present. Despite a general government pledge to look at privatisation of the rail sector, BMI does not foresee significant progress along this route in the early part of the forecast period. Road transport will remain the largest sector, accounting for approximately 85% of all freight movements by the end of the forecast period. Taking all these factors into account, our forecast for growth in freight carried across all modes, in mntkm, stands at an annual average of 10.2% during the 2008-2012 period.

Pakistan's business environment reflects an economy that is currently expanding strongly, developing closer ties with neighbouring India and opening up additional routes for the flow of people and goods, and a global economy experiencing a relatively durable upswing. At the same time, Pakistan is a high-risk environment, with weak transport infrastructure attempting to support the requirements of a population that is still largely rural. Previous lack of investment in the transport system has left much infrastructure in need of repair and accidents are relatively common. Pakistan scores below average for the Asia and Pacific region. It scores well in terms of broad economic factors, its actual and forecast growth rate for foreign trade and its forecast growth in freight transport through to 2012. According to our latest estimates, the total value of transport and communications will rise to US$28.58bn in nominal terms by 2011, representing 13.2% of Pakistan's GDP.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis: Gas Pipeline From Iran

Gas Pipeline From Iran Industry SWOT

Business Environment SWOT

Chapter 3 - Business Environment Overview

Regional Overview

Country Overview

Asia Pacific Freight Business Environment Ranking

Chapter 4 - Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity

Political Risk Summary

Economic Risk Summary

Business Environment Risk Summary

Labour Force

Legal Issues

Chapter 5 - Industry Trends And Developments

Road

Sea

Pipelines

Chapter 6 - Industry Forecast Scenario

Macroeconomic Forecast

Table: GDP And Population

Chapter 7 - Country Snapshot: Pakistan Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education And Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption And Stratification

Table: Wages Per Annum

Transport Outlook

Table: Main Industry/Macro Indicators

Freight carried (domestic and international):

Chapter 8 - Trade Environment

Overview

Trade Regime

Reforms

Key Trading Partners

Table: Top Export Destinations, US$mn

Table: Export Trade, % y-o-y

Table: Value Of Imports By Category

Table: Value Of Exports By Category

Table: Top Import Sources

Table: Import Trade, % y-o-y

Chapter 9 - Market Overview

Multimodal

Competitive Landscape: Multimodal

Road

Infrastructure

Competitive Landscape: Road

Rail

Infrastructure

Competitive Landscape: Rail

Company Profiles

Air

Infrastructure

Competitive Landscape: Aviation

Company Profiles

Water

Infrastructure

Competitive Landscape: Maritime

Company Profiles

Pipelines

Infrastructure

Competitive Landscape: Pipelines

Chapter 10 - BMI Forecast Modelling

How we generate our industry forecasts

Transport Industry

Sources

Chapter 11 - Appendix: Regional Demographic Data

Table- Manufacturing Wages (ave per annum), US$

Table - Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Asia Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Asian Freight Transport Sources

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BMI's Asian Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: