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International trade always plays an important role in stimulating
economic growth. The world economies become interdepending with the
trend of globalization and modernization in the means of transportation.
The economic growth is widely be accelerate by Openness to international
trade. Sea is the cheapest and the most efficient mean of transportation
and more than 90 % of the international trade is routed through the sea.
Due to its geo-political situation and geography in the region, Pakistan is
largely dependent on sea for its international trade, which in 2003-2004
roughly accounted for 36.3 % of the Gross Domestic Product (GDP). Over
95% of countrys global trade is directed through the sea
Global shipping industry constitutes one the largest sphere of human
endeavor. Strong shipping industry reshapes the economy of a country
leading towards stable economy which is essential for political stability.
Shipping industry and economic development are closely linked. The
growth of the shipping industry is therefore of great significance to all
nations 23. Shipping services are important for international trade, because
over 90% of all global trade measured in weight and volume, is routed by
water 24. In most developed nations there has been a vow to maritime
policy as part of a stabile trade policy. A well-built merchant marine 75
promotes fruitful exports, profitable trading ventures, and a national
outreach to get the best available products and technology.
Shipping Industry of a country is described as an umbrella with established
sequence of following linkages:
First and foremost, a large number of ships are needed for the
purpose of handling various types of cargo; such ships include container
vessels, crude carriers, chemical carriers, LNG carriers, break-bulk cargo
carriers, general cargo carriers and the list goes on.

Secondly, these ships have to be constructed in commercial yards,
which is another profitable enterprise. These ships also need periodical
maintenance & repairs and hence the need for ship-repair yards. Ship
repair requirements can take the form of emergency docking, machinery
defects, hull repairs, tank cleaning, machinery overhauls, alterations and
repainting. Ship conversion is also a lucrative activity.
Last but not the least these ships have to be berthed in ports to load
and off-load their cargo; and hence the need for ports. The importance of a
port stems from the fact that it is not only a place for simply handling
cargoes, it is much more than that. The more diverse the range of
integrated services it offers, the more competitive it becomes and the more
productivity it generates. The availability of logistics centers, free trade
zones and multi-modal transportation facilities within the port area
enhances its importance. A number of associated activities, in addition to
the value-added services just mentioned, like ship movement control,
logistics management, cargo handling and transportation, pilotage, tugs,
port control, as well as the need for dredging and navigational aids,
automatically get generated.
The total investment in shipping industry, of developing countries based on
five main reasons: to save foreign exchange, to reduce freight cost and to
promote the countrys foreign trade, to get the benefit from profitable
shipping trade, providing added employment, to assure suitable and
reliable shipping services. The capacity for avoiding considerable foreign
exchange payments for maritime vessels is often given by the developing
Nations as one important reason for investments in sea-borne shipping.
Although the present shipping provide slight employment opportunities but
through spin-off factors and linkage effects with trade, it would have
significant impact on trade. In case of war or other emergencies the
availability of shipping service to meet with countrys foreign trade has been
a consideration for development of many national merchant marines.
Due to the lack of capital, the developing countries look for less expensive
alternative. Even in some cases it causes the use of second hand ships, or
using chartered or leased vessels. However, day-to-day maintenance costs
are higher for old vessels with old machinery requiring constant
maintenance, a rusty body requiring consistent steel replacement and high
fuel consumptions. In fact maintenance and operation costs of aged ships

in developing countrys merchant vessels outweigh often their margin of

In 1947 Pakistan inherited a fleet of four privately owned cargo ships which
increased to 14 in 1950. In 1963, the National Shipping Ordinance was
promulgated and National Shipping Corporation (NSC) was established in
1965. The national fleet comprised of 53 vessels which were owned by 10
private shipping companies.
The national fleet strength grew to a record 71 vessels just prior to the
separation of East Pakistan and its emergence as Bangladesh in 1971. The
fleet strength declined to 57 vessels after the separation. In 1974, nine
private shipping companies, which had a total of 26 ships, were
nationalized. The national fleet strength increased to 51 vessels including
26 with the nine nationalized companies plus 25 ships with the state-owned
In 1977, 14 ships were inducted in the PSC during the Fifth Five-Year Plan.
Two years later, NSC and PSC were merged to form the Pakistan National
Shipping Corporation (PNSC) which still remains the sole state-owned
shipping corporation. The total fleet strength increased to 60 ships with the
induction of 14 vessels in late 1970s and early 1980s.
Steady deterioration for the next two decades reduced the fleet from 54
vessels (518000 deadweight tonnage) in 1982 to 13 ships with deadweight
tonnage of 229,579 tons in 2002-2003. 34
Old vintage vessels were replaced with under ten years old secondhand
Japanese vessels. Moreover, new build / buying resale vessels were also
embarked as part of PNSC development/ expansion plan over the last
decade. In 2011 PNSC had 10 vessels with aggregate tonnage of 633,273
dwt. Presently PNSC operates 9 ships with a total dead weight tonnage of
742207 dwt.

Total deadweight tonnage of Pakistan National Shipping Fleet is

considerably less than most private ship-owners in Greece only. By
contrast, Japan, which controls the largest number of merchant ships,
possesses a fleet of over 132 million tons. Pakistani merchant ships
transport only 6% of the total maritime trade as against the 40% declared
by the United Nations Commission on Trade and Development (UNCTAD)
for national carriers. In the result of which country is spending around $1.5
billion of foreign exchange annually on cargo charges, which is about 2.2
percent of the GDP.
Limited number of vessels in national fleet are unable to meet the
requirements of country. Major chunk of import and export relies on foreign
shipping services costing billions of dollars. PNSC claims to share 20% of
total sea borne trade of dry, liquid and container cargo. Major portion of
which is contributed by the crude oil imports. Induction of new ships in
national fleet is considered to be of prime value with equal attention
towards all types of cargo in the coming years for meeting national
requirements as per UNCTD.
The global trends in the shipping industry have drastically changed with
containerized cargo shipments taking over the bulk cargos. From cost
effectiveness of shipment to increased convenience coupled with the high
level of security, the growth in containerized cargo is ever increasing. This
consistent growth in containerized cargo is evident across the globe,
depicting the need for vessels for handling container cargo.
PNSC had three used container vessels in its fleet in 1996 for. PNSC
chartered these vessels outside Pakistan and did not bring them to the
country for due to high import duty. The container did not play any role in
meeting the shipping needs of the country until the vessels were scraped.
In this era of container business the national flag carriers has no container
vessel and it is imperative to induct container vessels to meet the container
traffic of the country.


There is no denying the fact that despite addition of new ships by the
national carrier the country remains heavily dependent on foreign lines.
Availability of funds remains the key constraint for government to meet the
revitalization plan for shipping. Unless private sector is involved in a big
way the country will remain dependent of the national carrier.
In order to handle Pakistan's international trade, active involvement of the
private sector is a must. However, without offering incentives convincing
the private sector to play any role is hoping against hopes.
In 1970s, there were some 70 to 80-cargo ships with PNSC and private
businessmen but after being nationalised, the private sector is reluctant to
remain involved in the shipping business. Apart, one of the biggest private
company got bank corrupted in 1990s which also fears the private sector
for investing in shipping industry.
Despite of the recent exemptions by the government on Customs duty,
general sales tax and withholding tax on imports of ships and other floating
crafts, investors are not ready to jump into the business. It is important to
attract private investors and encourage them to participate for sake of
national interest.
Shipping had no place on the list of priorities of the government which
evidently from the absence of a clear cut shipping policy for years. For the
first time the shipping was accorded the status of an industry in the
Shipping Policy announced by the government in 2001. The government
did not only abolish duty on the import of ship but also removed any
restrictions of the age and type of the ship to encourage induction of fresh
tonnage into the national maritime fleet. However, there has been no
induction of any new tonnage in the national maritime fleet.
Many attribute the lack of interest on the part of the private sector as
policies hardly ever materialize in the whole-hearted manner. Legal cover
to the policies and its true implementation is important to attract private
investors. In addition, provisions to ensure that the local shipping will be

accorded cargo preference and protection is also imperative. Incentives

alone would not be enough. Restricting the business opportunities for
investors by long term contracts like, the ten year exclusive contract to the
PNSC for the shipment of crude oil to the three national refineries are also
not viable for growth of shipping industry.
Global shipping trends are changing constantly in this era of technological
advancement. Meeting the international standards of IMO is imperative to
run the national fleet on commercial lines worldwide.
Stricter maritime codes of conduct for maritime safety, security and
protection of the environment by IMO poses a major challenge for the
Pakistani Fleet. Meeting IMO conventions pertaining to enhanced technical,
operational, effective and efficient maintenance of maritime safety
standards, compliance with the provisions of the ISPS Code and changes
to SOLAS and to be proactive in identifying and addressing maritime and
shipping activities that could have an adverse impact on the environment
are critical for existence on national fleet in global shipping.
PNSC modernized its fleet and reduce average age profile of fleet from 20
years in 2001 to under 12 years in 2011 which resulted in an impressive
turnaround in terms of PNSC performance. One of the main reasons of
decline in financial revenues of Shipping Corporation was dilapidated
condition of its fleet. After passing the economic life, constant maintenance
and repairs cost huge amounts of money to keep them running. It not only
increases the idling time of ships but also restricts them from undertaking
long voyages, hence resulting financially troubled corporation. An effective
maintenance plan for present ships and sound procurement plan, in
absence of indigenous construction, must exist to avoid dilapidation of
There are three national ports of Pakistan
Karachi Port
Port Qasim

Gwadar Port
Karachi Port is the largest port of Pakistan having 30 berths and 3 oil piers.
It has two separate container terminals, Karachi International Container
Terminal & Pakistan International Container Terminal for handling
containerized cargo. The Port is operated under Karachi Port Trust (KPT)
and handle 60 % of the sea borne trade of the country. Its annual cargo
tonnage averages 26 million metric tons and annual container volume
averages 6.5 million TEUs. Major expansion/ development projects include:
Construction of a new terminal called the "Pakistan Deep Water Container
Port at Kemari.
New bulk cargo terminal at East Wharf.
Deepening of quay wall for 14-meter draught vessels.
Increase the handling capacity of KICT from 300,000 TEUs to 400,000
TEUs per annum
Reconstruction of the oldest oil pier to allow tankers of 90,000 metric tons
deadweight (DWT) to berth
A new 100 acre cargo village to cater for containers and general and bulk
Port Qasim
Port Qasim is the first industrial and multipurpose commercial port of
Pakistan. It has 14 berths including and Oil Terminal, Liquid Cargo Terminal
and an LPG Terminal. It also has Qasim International Container Terminal
(QICT) for handling containerized cargo. The port operates under Port
Qasim Authority (PQA) and handles 40 % of the seaborne trade. Its annual
cargo tonnage averages 24 million metric tons and annual container
volume averages 0.37 million TEUs. Major expansion/ development
projects include:
Construction of LNG Floating Terminal
Construction of Coal & Cement Terminal with handling capacity of 8 million
tonnes per annum with a storage capacity of 0.9 million tons.

Construction of 2nd Oil Terminal with handling capacity of 9 million tonnes

per anum.
Deepening of Navigation Channel for all-weather 14 meter draught vessels.
Gwadar port is the third port of Pakistan which is currently in its initial stage
of development. It has 3 multipurpose berths and has the capacity to
handle 50,000 DWT bulk carriers having draught upto 12.5 meters. The
port is not yet commercially operational as it lacks required support
infrastructure and is not connected with the rest of the country. The master
development plan of Gwadar Port visions to have 15 berths including:
4 Container Terminals
1 Bulk Cargo for 100,000 DWT ships
1 Grain Terminal
1 Ro-Ro Terminal
2 Oil Terminals for 200,000 DWT ships
Floating LNGs terminal with capacity of 500 million cubic feet of gas per
Approach Channel of 14.5 m depth
Longer term plan of port development include construction of 100 berths
with cargo handling capacity of 400 million tonnes per anum and dredging
of channel upto 20 meters.
The largest port in the country that of Karachi, is presently handling around
1.4 million TEUs of containerized cargo and 26 million tons of other general
and bulk cargo per annum. By contrast, the Port of Singapore handled 32.5
million TEUs of containerized cargo and 227 million tonns of other cargo
per anum. The Port of Singapore, moreover, earns over five billion dollars
in revenue, simply because it provides an array of value-added services.

While the volume of seaborne trade is increasing, national ports, must be

well equipped to handle the ocean freight. Karachi Port and Port Qasim
being the major ports of the country should work together to construct the
most modern terminals/ berths and piers to competing with the international
ports of the world. In addition, they must work to improve the infrastructure,
modernize their crafts and equipment in order to meet the challenges of
globalization. Along with professional management the ports must have
good networking and Information Technology port community to enhance
their projection. Lucrative tariff rates should also be introduced to make our
port receptive and investment friendly in the region.
Karachi port and Bin Qasim port have been in the process of modernization
in the recent years in which a lot of development, reconstruction and
expansion of the port have taken place. Many major projects are in the
pipeline to overcome the infrastructural gap with the regional ports.

The development of a deep water container port at Keamari Groyne, which

includes Ten berths at 18m depth, 5 km of quay was started in 2010. Phase
I of the project with four berths with 1500 m quay wall was scheduled to be
completed by 2014 but has not been completed till date.

Project of an LNG Terminal was planned to be developed by Granada

group of Companies at a cost of US$ 274 million with handling capacity of
3.5 million tonnes per annum. The Terminal was expected to be completed
by 2012 but has not yet been materialized.
Timely execution of planned projects without hindrances is critical in future
prospects of the national ports.

Currently, Pakistan has two main operating ports: Karachi Port and Port
Qasim. During the coming years, their capacity expansion programs are
unlikely to keep pace with the expected growth in demand, resulting in a
need for a third port to fill the gap.
In particular, Karachi Port has significant physical limitations and will not be
able to grow at the same speed as the national growth in demand over the
coming decades. These limitations result mainly from its location, which is
within the city of Karachi itself, which has seen very rapid growth over the
past years.
In the case of Port Qasim, although having a large physical space for
expansion, its possible speed of development is hampered by its up-stream
location, which is more than 40 km from the open sea, resulting in long
turnaround times for visiting ships. This is not a problem for cargoes that
are linked to industries located near the port, but it carries costdisadvantages for cargoes that have origins and destinations elsewhere.
To ensure that national development is not hampered by a lack of national
port capacity in the future. Given the expected rapid growth in demand for
port capacity, it is likewise important to continue expanding the capacity of
Gwadar port over the coming decades.
Gwadar port is located at the mouth of the Persian Gulf and outside the
Straits of Hormuz. It is near the key shipping routes used by the mainline
vessels in the region with connections to Africa, Asia and Europe and
enjoys high commercial and strategic significance. Gwadar port needs to
be equipped with necessary technology and infrastructure so that it may
not only become a starting point for an economic corridor towards China
but also provide an ideal location for the empty oil tankers entering the
Gulf before reloading for necessary repair and maintenance, he
The only heavy engineering unit equipped with shipbuilding, ship repairing
and heavy/general engineering works is Karachi Shipyard and Engineering
Works Limited (KSEW) which was established in 1957.

Since inception the fully government-owned organization, has built over

400 vessels of various types and sizes not only for the country but also for
many other nations in the region. It is fully equipped to build passenger and
cargo ships, oil tankers, bulk carriers of up to 26,000 dwt.
It has built three vessels for PNSC, the biggest of 17,200 dwt vessel. It built
its last ship in 1992, a 17,300 dwt vessel for China. It has also built a
number of vessels for port operations such as tugs, dredgers, hopper
barges, ferries, fishing trawlers, launches and special purpose craft. It has
built ships not only for PNSC but also for such foreign organizations as
National Shipping Corporation of Dubai, China Ocean Shipping Corporation
and China National Machinery Corporation.
In addition, KSEW has repaired over 4,000 vessels, half of which were
foreign flagships. Many navies and shipping lines have a regular customer
of KSEW.
The sole shipyard in the country, Karachi Shipyard & Engg Works Ltd, is
doing reasonably well by Pakistani standards, having come out of the red
some five to six years ago. Its profits are however mainly dependent on
ship-building orders from the Pakistan Navy and its competitive edge is not
being put to the test. A case in point is an international tender floated by
KPT some time back for construction of a tug, which was bagged by a
Bangladeshi yard. KSEW has likewise not been able to partake of the huge
requirement of periodical maintenance and repairs of the large number of
ships transiting to and from the Gulf.
KSEW which in better times bustled with activities today stands more or
less idle as not only that it has received no orders of ship-building during
last years, except for a number of orders from Pakistan Navy. PNSC
prefers to have its ships repaired at the foreign ports. Moreover, the
Karachi Port and Port Qasim also prefer to give tenders for port
maintenance vessels to foreign companies. KSEW must regain the trust of

national corporations and endeavor to regain its status as a competitive

ship building/ ship repair unit both nationally and internationally.
Shipbuilding is an attractive industry. Shipyards create quality jobs and
support economic growth. Shipyard activities include ship construction,
repair, conversion, and alteration. They also include the production of
prefabricated ship and barge sections, and other specialized services.
Apart from focusing on uplifting of KSEW, it also important to plan for other
shipyards in the country. It would not only create competition for acquiring
better shipbuilding skills, but also will enhance the ship building capacity of
Another important factor in revitalizing ship building at KSEW is its
expensive rates of construction and least technological sophistication in
terms of machinery, electronics, ship building designs and material. Unit
price of each 600 tonnes Maritime Patrol Vessel is US$22.5 million at
KS&EW, which is $4.5 million more than builders shipyard in china.
KS&EW cannot construct ships through purely indigenous means. Such
constructions rely greatly on foreign suppliers for almost all the equipment.
KS&EW has to be competitive, either in terms of production costs or in
terms of technological sophistication to enjoy good customer ship in the
Pakistan due to its location is in a position to serve two most important
regions of the world, South Asia the world biggest consumer market and
Central Asia famous for its riches. Years of neglect, absence of long-term
policies and the non-implementation of the ones which were ever devised,
have taken a heavy toll on the local shipping, port authorities and ship
building in Pakistan. If these industries flourish, they would not only put the
economy of Pakistan on strong footing but also lead to economic

independence. Contribution of these industries to economy of Pakistan will

improve its GDP. Its time to exploit the real potential to make shipping the
backbone of the economy not only to save enormous foreign exchange but
also to ensure smooth flow of seaborne trade which only a dedicated
national merchant marine could do in times of peace or war.