Pakistan Road Logistic Sector
The logistics sector is a cornerstone of economic growth, productivity, and export competitiveness. Globally, it contributes to employment generation, resource...
The logistics sector is a cornerstone of economic growth, productivity, and export competitiveness. Globally, it contributes to employment generation, resource allocation, and economic value addition. Logistics costs typically comprise 12–15% of GDP in developing countries, and 18–20% in developed ones. Efficient logistics systems promote industrialization and export diversification by reducing trade costs and increasing market access.
For Pakistan, logistics is particularly critical. While tariff reductions have limited impact on trade costs, logistics, such as transport infrastructure and customs efficiency, play a far greater role. Sectors like agriculture, mining, and heavy industry, which are highly logistics-intensive, stand to benefit significantly. However, transport effectiveness in Pakistan has been declining, posing a major hurdle to competitiveness.
The logistics sector contributes over 10.5% to Pakistan’s GDP and employs 5.4% of the workforce. However, performance of the sector is declining. High volatility and a sharp reduction in private sector investment indicate structural fragility. Roads dominate the sector, with a 501,169 km network overshadowing the 7,791 km of rail. Yet, Pakistan has only 300,649 registered trucks, vastly fewer than regional peers like India with 12.5 million trucks, highlighting critical infrastructure gaps. Currently, 94% of freight is moved by road, creating supply chain inefficiencies, congestion, and elevated costs.
Warehousing and cold-chain logistics are weak, with over 40% of perishables lost due to inadequate storage. Airports and railway stations lack cold storage, undermining the handling of temperature-sensitive goods. Institutionally, the sector is fragmented and governed by outdated laws, despite progressive policy frameworks like the National Transport Policy and the National Freight & Logistics Policy. Implementation however, remains sluggish.
The road logistics market is fragmented and dominated by small owner-operators, who constitute 85% of providers but hold less than 5% market share. These operators face challenges including outdated vehicles, lack of access to finance, and minimal professional training. Technology adoption is low, and many vehicles lack insurance and do not meet international standards, increasing operational risks. Overloading is a persistent issue, damaging infrastructure and increasing maintenance costs, while inefficient spatial planning increases costs for export industries dependent on imported inputs.
Traffic on Pakistan’s roads is expected to rise 40% over the next decade, worsening congestion and emissions. The road sector already consumes nearly three times as much fuel as rail, straining resources and accelerating environmental degradation.
While CPEC and CAREC have improved segments of the road network, investment in public transportation and industrial growth policy remains limited. The trucking industry lacks fuel-efficient, low-emission vehicles. With increasing emphasis on global green trade standards, such as the EU Green Deal, Pakistan risks export exclusion if emissions are not reduced. The Export Logistics Performance Index benchmark shows Pakistan scoring 2.3/5, representing a 54% underperformance compared to regional peers. The Logistics Performance Index (LPI) also declined from 2.42 in 2018 to 2.3. The main gaps are in sustainable logistics, supply chain efficiency, and cost. Sustainable road logistics show a 138% underperformance, primarily due to old trucks and weak environmental regulations. Outdated customs processes and informal vehicles prevent Pakistan from accessing key markets like China. Informal trucks evade regulations, increasing systemic costs and hampering access to premium trade routes.
Governance is fragmented, with multiple agencies managing roads, ports, and customs, resulting in siloed decision-making and poor coordination. The absence of a dedicated Ministry of Transport and Logistics has hindered past reform efforts like the National Trade Corridor Improvement Program. This results in selective enforcement of axle load rules and incoherent regulatory practices.
The state-run National Logistics Cell (NLC) dominates the sector, moving nearly 60% of the country’s crude oil. Despite its strategic role, NLC’s privileged position discourages private sector participation and innovation, leading to a monopolistic market structure.
Infrastructure deficits further hinder logistics efficiency. Dilapidated roads, inadequate warehousing, and the absence of modern vehicle support systems delay delivery and raise costs. Fleet renewal is constrained by high leasing costs and poor access to credit, locking operators into outdated practices. The segmentation of logistics into formal, informal, and quasi-governmental actors raises costs for compliant operators and fosters inefficiency. Pakistan needs a strategic reset through structural reforms, institutional strengthening, and targeted investments.
The prioritized recommendations include:
The PBC is a private sector not-for-profit advocacy platform set-up in 2005 by 14 (now 100+) of Pakistan’s largest businesses. PBC’s research-based advocacy supports measures which improve Pakistani industry’s regional and global competitiveness. More information about the PBC, its members, objectives and activities can be found on its website: www.pbc.org.pk
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