Road Logistics’ Performance Constraining Export Competitiveness in Pakistan

Abstract

This paper investigates the structural, operational and regulatory deficiencies of Pakistan's road transportation industry coupled with their performance-related impact on export competitiveness. From an empirical analysis based on primary-data collection, a bespoke Export-Linked Logistics Performance Index (E-LPI) was created to compare Pakistan's logistics performance against regional averages via Principal Component Analysis (PCA). Despite the industry representing over 10% of Pakistan's GDP, it remains an informal, fragmented and undercapitalized niche due to legacy regulations, insufficient public and private governance and a geologically dispersed network compounded by an ineffective, fuel-wasting vehicle fleet. However, the compounded E-LPI results suggest 13% performance in international standards versus 72% - suggesting a 138% deficit in sustainability, 51% in technological tools and 67% in freight costs. The latter two extremes are detrimental since sustainability could prevent the country from meeting the EU Green Deal and other global standards and it could become excluded from regulated markets. The gap in technological facilitation means that there is not enough tracking and tracing to facilitate digitization and approvals for further operations. Third, a huge percentage of freight costs related to top exporting industries - textiles, agriculture, heavy industries - undermine global competitiveness since buyers will not accept elevated prices - and thus, Pakistan is not benefitting from its geo-strategic advantage. Thus, to more effectively position itself as a cross-border trading partner with regional developments - including the China-Pakistan Economic Corridor (CPEC) and the Central Asia Regional Economic Cooperation (CAREC) - this inconsistent, inefficient structure must be transformed. Otherwise, Pakistan will fall farther behind in global rankings and miss out on valuable opportunities. Lastly, this study highlights a comprehensive reform potential that is aligned with international standards from the introduction of a Ministry of Transport and Logistics to interprovincial regulatory harmonization, enforcement of axle load restrictions, modernization of fleets and green technologies through subsidies and digitization through comprehensive logistics efforts. It's expected that such reforms will promote reduced costs and emissions while providing transformative export capabilities to establish Pakistan as a valuable, low-cost yet climate-resilient regional logistics partner.