Inland Water Transportation: Can it become a vital part of Pakistan's freight transport policy?
According to statistics released by the Ministry of Petroleum and Natural Resources, transport ranks second in utilisation of energy consumption at 30%, preceded only by industry at 40% and followed by domestic consumption of energy at 21%. On the other hand, given that up to 96% of all inland freight in Pakistan is carried by diesel guzzling trucks plying our roads, while hardly 4% is carried by rail, it would only be fair to conclude that the system of inland freight transportation in the country is largely dependent on petroleum products, which are both expensive and environmentally damaging.
The Benefits of Introducing Inland Water Transport in Pakistan
This is in sharp contrast to the undeniable reality that Pakistan has in existence a vast network of over 30,000 km of rivers and perennial canals, which can be utilised quite efficiently to transport freight in a relatively cheap and environmentally friendly manner, after implementing some minor adjustments. This would be what is known in logistics parlance as an "Inland Water Transport" (IWT) system.
IWT is a method of using small to medium sized barges on water bodies (such as rivers, canals and lakes) that lie within a country's frontiers for the purpose of transporting materials and human freight. In order to implement IWT successfully, a body of water must be "navigable" i.e. it must be deep, wide, and slow enough for a vessel to pass. While depth is a relative concept when talking about water transport, normally a channel depth of 1.2-1.5 metres is considered to be suitable to allow navigability for medium-sized craft. IWT systems have been used for centuries in various parts of the world including countries such as India, China, Germany and Russia. Estimates of the extent of resultant cost saving vary but experts suggest that the establishment of IWT in Pakistan may reduce fuel costs by about 8 to 10 times compared to road transport, and will cost 3 to 4 times less than rail transport.
Furthermore, the existing system based on lorries in the country is already overburdened. Pakistan's annual cargo tonnage (the total mass of actual cargo transported) at its existing three ports is roughly 45 million metric tons. At the same time, there is at least 200 billion ton km movement of cargo within the country, which is expected to reach 1,400 billion ton km of cargo within the next seven to eight years (ton km is a unit of freight measurement meaning the movement of 1 ton of cargo by a distance of 1 km). According to the World Bank's findings, the average load factor in Pakistan is about 100%, with only about 10% of empty running balanced by the estimated 10% average overloading. In other countries, it is common to find average load factors of about 60-70%, with figures as low as 50% being the norm for specialized trucks, such as oil tankers. If no corrective measures are taken, there would be a costly increase in our imported fuel bill, the number of trucks, and road network expansion and maintenance costs, within the next decade or so.
According to the findings of the Planning Commission's taskforce on Maritime Industry, one liter of fuel carries a ton of cargo 20 km by truck, and 70 km by rail, but 180 km on water. Moreover, to carry 1,500 tons over 200 km, 60 trucks would use 15,000 liters of fuel, while three trains would use 4,200 liters of fuel, but one waterborne barge would use only 1,600 liters of fuel. Another study finds that freight transportation costs per ton km handled by water transportation services would be about 1/10th of highway costs, and 1/4th of the lowest possible rail rates. With oil import bill touching $15 billion a year, fuel savings are critical, and can help earn carbon credits, which themselves translate into cash. Consumers as well as producers would be direct beneficiaries in terms of reduced prices, as the cost of production would decrease. Farmers in Punjab and Sindh (the directly affected provinces) could also benefit from IWT by transporting fertilizers and agricultural produce in a timely fashion.
Besides the fuel saving factor, there is the added advantage of cost savings under the head of road construction and maintenance that BATT could potentially allow for. It may be noted that building each kilometer of a standard 24-ft wide road costs Rs.80-100m (US $930,000 to $1.17m), while the cost of commissioning the entire 200 km of the proposed Indus Pilot Project (discussed below) is less than Rs.100m. Likewise, the maintenance of roads--averaging 1% of construction cost--eats up billions of rupees every year, but the maintenance cost of waterways would hardly be 20% of the maintenance cost of roadways. Roads in Pakistan are designed to have a life of ten years, but in reality, this is reduced significantly since the damage caused by a single container truck is equivalent to that by 1,500 to 2,000 cars. Additionally, water transport would allow for the creation of more jobs and reduce the burden on our already overcrowded roads. Traffic congestion costs developed economies such as the EU as much as 2% of GDP annually.
Water transport can also be remarkably complementary with other forms of transport such as rail and road, thereby playing part of a larger network of domestic intermodal transport operations, as the example of countries such as Russia and Turkey has illustrated in recent years. In fact, it may be mentioned here that IWT handles 46% of all inland freight in the Netherlands, 32% in Bangladesh, 14% in USA and 9% in China. In 2007, China's inland waterways transported 1.2 billion tons of cargo, compared with waterway cargo of 800 million tons in the US and 500 million tons in the EU. India and Bangladesh have advanced their inland water networks far enough to allow for a crossover between the systems; and no less than 1,500 round trips were made by Indian and Bangladeshi cargo vessels in 2009-10.
At the EU level, the main types of goods transported using this mode of transport are metal ores, agricultural produce, coke, coal, and petroleum products. Together, they accounted for nearly 60% of all goods transported on EU inland waterways in 2010. This indicates that IWT is well suited to providing transport for heavy, bulky, non-perishable and low-grade traffic at a low price relative to weight where speed is not an important factor.
What holds back IWT in Pakistan?
It is but natural to wonder that if this has really been such a successful model all over the world (including in our region, as shown by the example of India and Bangladesh), then why has it failed to take off in Pakistan? The reasons for this are both technical and monetary.
Technically, there is the issue of navigability of some waterways in Pakistan which does not presently allow for this system to be implemented on a large scale. History tells us that IWT was used along the Indus River until the construction of Sukkur Barrage without any locks in the 1930s. The need to incorporate IWT in new barrages and bridges on the rivers was overlooked, since this coincided with the laying of railway lines throughout Sindh and Punjab by the British, which was understood to be a far more modern system in that era.
Cost effectiveness-wise, in spite of enjoying advantages vis-a-vis other transport modes, such as the existence of natural waterways and environmental friendliness, IWT, nevertheless, is simply not competitive enough at the moment against road and railway transport, because there is too little load, which would help push down costs further. Between rail, road, and air, which share the entire weight of inland freight, in spite of their weaknesses, it is hard for IWT to make any inroads unless the competitive cost issue is addressed.
Proposal for IWT Pilot Projects in Pakistan
I believe that both these problems can be addressed quite easily by implementing some simple measures. In fact, the solution to both may lie in a proposal which has already been drawn up by experts and approved by the Government, but awaits implementation.
According to media reports, in 2009, the taskforce on the maritime industry recommended activating cargo movement on inland waterways of the country. A total of three IWT pilot projects on the Indus River, Nara canal and Punjab canal were subsequently proposed before, and approved by, the President of Pakistan. In 2010, the Planning Commission and a private concern signed a Memorandum of Understanding (MoU) for implementing IWT in Pakistan. A sum of Rs.1.4 Billion for the project was also allocated in PSDP in the Federal Budget for 2009-10. The Pakistan Navy, with financial help from the private sector, subsequently conducted a survey of 200 km of the Indus River from Nowshera to Kalabagh. It was found that in the northern 200 km of the Indus, down to Kala-bagh, the water is sufficiently deep enough, while the bridges are also high, while only a little work needs to be carried out on the navigable channel.
Surveyors have already prepared route charts using the latest technologies, while a comprehensive technical report for the pilot project also has been written. The private concern agreed to fund all shore equipment, terminals and cargo craft, while the necessary consents of all relevant government departments were also acquired. However, the project remains subject to unnecessary stagnation as of 2013, in spite of its immense potential benefits.
Furthermore, two CI factories already exist on the bank of the Indus river producing 18,000 tonnes of cement and fertilizer daily, much of which are presently transported north over a 400 km road network. There is also substantial bulk cargo life rock salt and rock phosphate moved from north to south. All this cargo can easily be diverted to the river, with considerable economy in the cost of transportation through saving of fuel.
While the Pilot Projects proposed for the Indus River, and Nara and Punjab canals may most certainly be reinvigorated without any further delay, it might be useful to suggest a few recommendations which would help make the system technically and monetarily feasible at a more widespread scale across the country.
In the first step, successful implementation of IWT must account for how using the system more extensively will require expenditure in both the short and long terms. In the short term, IWT would require adjustment within existing bridges and barrages to allow for the passage of barges. Experts contend that this is not necessarily a very expensive or infeasible task, and by addressing a few obstructions along the route, the Indus could potentially be navigable from Kalabagh to Port Qasim. Of course, this is not a short term project, and could only be undertaken in the long run, after evaluating the success from the pilot projects discussed above. At a future stage, Pakistan may even hypothetically consider developing inland ports at suitable locations (such as Chashma) for China and Central Asia, which would save 900 miles of haulage by road and rail to the Arabian Sea.
However, what might be more challenging in the long run would be accommodating large amounts of cargo on our canals and rivers without causing congestion, which would increase costs. For instance, in Russia, the concentration of cargo flows on major waterways has doubled the time required for passing these waterways, and any further increase in cargo transportation on these waterways would be impossible without major reconstruction requiring substantial investment. While such an occurrence is a far-off possibility in Pakistan, we must account for its incidence in the future.
At the same time, numerous routes for implementing IWT are potentially available but a few routes are generally agreed upon. For instance, the Kacchi Canal, which runs parallel to the Indus along its west bank, is 300 km long in Punjab (with depths of 12 to 14 feet) and 200 km long in Balochistan. Some 300 km of the canal passing through Punjab is lined to control erosion, with a steady flow and no discharges. It is 12 ft deep as it enters Balochistan, where it becomes an irrigation canal. As water is taken out for irrigation, the canal's depth drops until it is only a few feet deep by the time it reaches its end. So its use for transport becomes less feasible downstream but it can be used quite easily upstream for the purpose of IWT. It may be mentioned here that the west bank of the Indus is relatively underdeveloped and any new shipping activity will greatly help in the development of the area.
Further research also needs to be undertaken on the complementarities of water and road transport in Pakistan, since road transport still remains the current dominant mode of freight travel, while foreign trade is mostly carried out by sea. Therefore it would be necessary to install efficient crossover infrastructure that will facilitate intermodal transport, which is the need of the day.
Finally, it must be pointed out that in order to attract new cargo flows from the private sector, TWT must offer services of at least the same quality as that of other modes of transport--and that too, at competitive rates--which it is not doing at the moment. Comparative research undertaken on Pakistan and Africa finds that costs per ton km reduce drastically with increasing distance and consignment size (1). But in order to achieve this, it would be vital to involve the private sector itself in developing the system, since they would be its direct beneficiaries.
This has also been the model of choice worldwide. For instance, the European Commission, through its CREATING project, is hoping to increase waterborne transport by strengthening the position of entrepreneurs in inland navigation, in order to make it economically advantageous. Closer to home, the Indian government has indicated its priority to create 'highways' on waterways, and to maintain them with private sector participation and assistance from international donor agencies. India has also announced a tax holiday of ten years to this sector, in order to encourage investment in upgrading indigenous capabilities. Another important policy initiative has been to involve more actively state governments in the development of IWT, which is something which would also have to be clone in Pakistan at the provincial level.
In conclusion, IWT can potentially be used for transporting bulky and durable cargo cheaply, after proper planning undertaken with foresight. While IWT is rapidly becoming a desirable method of freight transfer internationally, due to cost and environmental benefits, in Pakistan it still remains unutilized largely because it is not cost effective at the moment. By implementing the Indus Pilot Project and evaluating the proposals above, it is believed that these concerns can be addressed.
(1.) Rizet C. and Hine J. L. "A comparison of the costs and productivity of road freight transport in Africa and Pakistan", Transport Reviews, Vol. 13, No. 2, 151-165, 1993. Quoted in World Bank study titled "Measuring Road Transport Performance" accessible at http://www.worldbank.org/transport/roads/rdt_docs/annexl.pdf
Saif Asif Khan is the Director (Research and Development) at the Federation of Pakistan Chambers of Commerce and Industry. He possesses an MPhil in Economics from the London School of Economics and Political Science (LSE), and is presently teaching part-time at the Indus Valley School of Art and Architecture, having taught in the near past at both LSE (London) and [BA (Karachi).
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|Title Annotation:||PAKISTAN / IWT / FREIGHT TRANSPORT|
|Comment:||Inland Water Transportation: Can it become a vital part of Pakistan's freight transport policy?(PAKISTAN / IWT / FREIGHT TRANSPORT)|
|Author:||Khan, Sail Asif|
|Date:||Jun 1, 2013|
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