Gwadar shipping activity picks up momentum

Port utilisation increases to 30% with hopes for further growth amid ME tensions

ISLAMABAD:

Trade and shipping activity at Gwadar Port has got a boost in the backdrop of US-Iran war as port utilisation reaches 30% amid optimism about further increase in business.

The Middle East war is reshaping the region and its surroundings where different blocs are emerging. The United States, the United Arab Emirates (UAE) and Israel are on the one side whereas Saudi Arabia, Iran, Turkey, Qatar and Egypt are on the other.

This scenario has prompted the creation of new trade and energy corridors and has also encouraged Gwadar Port to highlight its geographical position that can bypass the Strait of Hormuz. During the war, hundreds of ships were stranded in the sea and to facilitate them, Pakistan offered both on-dock and off-dock facilities – the first such initiative to boost activity at the country's ports. Additionally, the government opened six land routes for 3,000 containers of Iran stuck at Pakistani ports. This step also offered an opportunity to establish connectivity with Central Asia at a time when Afghanistan had halted transit trade for Pakistan.

In a major incentive, sweeping reductions in tariff rates were announced for Gwadar Port aimed at strengthening the deep-sea facility's position as a competitive regional logistics and transshipment hub. Under the revised tariff structure, berthing fee for container vessels and ships carrying transit or transshipment cargo was slashed by 25%. Similarly, the international transshipment container cargo charges were cut by 40% while transit container cargo charges were reduced by 31%. A one-month free storage was announced for general cargo versus the standard five-day allowance at other national ports. At present, three ports are considered competitors in the region, which include the Dubai Port, Iran's Chabahar Port and Gwadar Port. The recent measures are targeted at making Gwadar Port more competitive, which may give a tough time to the Dubai Port.

In the midst of the war, Pakistan and Iran came closer to each other due to Pakistan's efforts to arrange peace talks. A plan is being studied to connect ports of Iran, Pakistan and Oman as the US and Iran have extended their ceasefire agreement. However, the question is how Pakistan will be able to sustain the momentum or increase activity at Gwadar Port after the war dust settles. "We have been able to operate Gwadar Port at 20-30% capacity. We will continue taking measures to utilise the remaining 70% capacity under a master plan," Muhammad Junaid Anwar Chaudhry, Minister for Maritime Affairs, told The Express Tribune.

Though Pakistan has opened six land routes to reach Central Asia via Iran, Russia and Uzbekistan are not satisfied with the situation because of the current war. Even the Iranian foreign minister termed Chabahar Port a golden gateway for India when he met his Indian counterpart. Meanwhile, Uzbekistan has said that it is conducting a study with Pakistan and Afghanistan for a transit trade route. Deputy Minister of Transport Jasurbek Choriev revealed that a survey had commenced and Afghanistan, Pakistan and Uzbekistan were in a "conceptual agreement" to create a transit corridor to connect Central Asian nations with ports on the Arabian Sea.

Separately, the Russian media has disclosed that Russia, Turkmenistan and Afghanistan are heading towards signing a transit trade corridor deal. Russia's Business Centre Head in Afghanistan Rustam Khabibullin has been quoted as saying that they have proposed a new route, considered an alternative to the North-South corridor, which suffered a lot due to the Middle East conflict.

Central Asian states and Russia are proposing new routes, which will ultimately be connected with Pakistan via Gwadar Port and through bypassing Iran. Still, there are some key hurdles. The first one is the security situation in Balochistan and the absence of road and rail linkages with Gwadar Port. China and Russia are already mediating between Afghanistan and Pakistan to cool down tensions. The transit trade routes are more in favour of Afghanistan than Pakistan as they will fetch millions of dollars in transit fee. Also, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline will pass through Afghanistan, which will earn roughly $200 million in annual transit fee.

China and Russia are investing heavily in Afghanistan, especially in minerals and rare earths. "These two countries could benefit from transit trade routes if Gwadar Port becomes fully operational," an expert remarked. Moreover, Pakistan and China are working on CPEC 2.0, where primary focus is on B2B investments, which will help set up industries in Pakistan. The two sides have signed $20 billion investment deals for industrial projects including setting up battery storage facilities.

If Pakistan was able to attract industries, including from China, it would be a big push to Gwadar Port operations, experts said, adding that Pakistan was also looking towards Saudi Arabia and Kuwait that could build strategic energy reserves in Gwadar. The proposed Energy City also comprises LPG and LNG terminals.

Owing to the absence of road and rail linkages, Pakistan has offered Central Asian states to use cargo airlines for lifting their goods from Gwadar, where storage facilities will be provided free of cost for one month. "Kazakhstan has already set up a cargo company to airlift goods," an official said.