The Asian Development Bank (ADB) said in a recent report that although Afghanistan has traditionally relied on Pakistan as a gateway to international shipping routes, recent trends indicate that 70 percent of Afghan transit trade is now diverted through Iran.

The ADB’s Corridor Performance Measurement and Monitoring (CPMM) Annual Report 2019, published this week, stated that Pakistan is still facing challenges in terms of removing barriers for road transport. 

This shift away from Pakistan has been driven by lower costs from foreign ports and more attractive security deposit and detention tariffs for transit containers from shipping lines that operate at Iran’s seaports.

The report stated that in addition, diesel fuel in Iran ($0.06 per liter) is significantly less expensive than in Pakistan ($0.86 per liter), which provides an additional edge in terms of cost competitiveness. 

Also, in the absence of a formal agreement with Pakistan, shippers and carriers face uncertainty in transit procedures, it added.

The report further stated that the CPMM trade facilitation indicator (TFIs) reported longer average border-crossing time, although relatively unchanged average border-crossing cost.

Total average transport cost showed an improvement, but both measures of speeds showed that trucks did not move as fast compared to 2018. The average border-crossing time between Afghanistan and Pakistan increased to 38.2 hours.

The time to cross Chaman was 60.1 hours, ranked as the most time-consuming border crossing point in 2019.

Peshawar took 45.8 hours and ranked the third most time-consuming, the report stated. 

These samples were estimated from commercial shipments carrying goods destined for Afghanistan as well as Central Asia.

Following the approval of its National Transport Policy in 2018, Pakistan embarked on a series of reforms and initiatives to address structural inefficiencies and impediments, to increase exports through lowering cost and lead time of transportation.

The report recommended the implementation of the national single-window system and port community system (PCS) to reduce cargo dwell time in seaports.

It said better parking area design and queuing systems could improve efficiency and speed up border crossing.

Pakistan does not yet have a domestic regulation on the international carriage of goods on road, which is a fundamental condition to implement the Carriage of Goods by Road (CMR).

The report also stated that greater adoption of freight on rail and inland waterways would reduce freight costs and boost low-unit value exports such as agricultural produce.

Afghanistan and Pakistan have however reactivated talks on the Afghanistan–Pakistan Transit Trade Agreement 2010, which aims to attract transit from Central Asia to seaports south of Pakistan, the report stated.