“Policy Paper Writing”

“Regulatory Challenges Affecting Market Competition

In Goods Transportation in PAKISTAN”
Sadaqat Ullah
Roll # 03
7th Semester
Honorable Dr. Mukarab Akbar
Department of Political Science
BZU- MULTAN
 “Regulatory Challenges Affecting Market Competition
In Goods Transportation in PAKISTAN”
Executive Summary:
The country’s transportation sector plays a vital role in the economy facilitating the movement of
Goods across the region. The goods transportation sector in Pakistan faces a multitude of
regulatory challenges that hinder market competition and impede efficient service delivery.
These challenges include: Complex and Onerous Regulatory Framework, Inefficient Permitting
and Licensing Procedures, Inadequate Infrastructure and Facilities, Unfair Competition from
Informal Sector, Lack of Enforcement and Monitoring and Iran diesel smuggling. There are
approximately 30 to 35 million people that are directly connected to transport network.
Addressing these regulatory challenges is crucial for fostering a competitive and efficient goods
transportation sector in Pakistan. Additionally the lack of practices and technology create an
obstacles in transportation .drivers are considered slave in the society .Non custom trade through
cargo truck effect the credibility of transport department. By streamlining regulations, improving
permitting procedures, investing in infrastructure, addressing informal competition, and
strengthening enforcement mechanisms, the government can create an environment that
promotes competition, innovation, and improved service delivery for the benefit of businesses
and consumers alike.

INTRODUCTION:
Goods transport is the backbone of PAKISTAN According to Frederick Taylor (1856-1915) it
is a pioneer in scientific management, and viewed goods transportation as a process that could be
optimized for efficiency. He introduced principles such as time and motion studies to streamline
workflows, enhancing productivity in the movement of goods.
Adam Smith (1723-1790). An economist and philosopher, Smith’s perspective on goods
transport is rooted in the invisible hand of the market. He believed that the pursuit of self-interest
by individuals and businesses would naturally lead to the most efficient allocation of resources,
including the transportation of goods. John Maynard Keynes (1883-1946) an influential
economist, considered the role of government in goods transport. He argued for state
intervention during economic downturns to stimulate demand, which indirectly impacts the
transportation of goods by influencing overall economic activity. Goods Transport are the Truck,
ships and the trains that shift the cargo and product from one place to another place. Earlier
people used camel carts and bullock carts to transport goods within Pakistani cities and mostly
trains to move from one city to another. Used to be used but with the passage of time bullock
carts and camel carts were replaced by cargo trucks.
However, according to a 2019 World Bank report, the transport sector employed an estimated
15% of the total workforce in Pakistan, which would equate to approximately 22.5 million
people. This includes those directly involved in transportation activities, such as drivers’ truck
owners, and loaders, as well as those indirectly involved, such as those working in the
construction and maintenance of transport infrastructure, and those providing support services
to the transport sector. According to a 2018 report by Pakistan Logistics and Fright Movement
Association there are almost 8000 to 10000 registered transport companies which are working
with in a country and there are some small and medium enterprises . The goods transport
network in Pakistan is extensive and plays a vital role in the country's economy. It is estimated
that over 90% of the country's goods are transported by road, with the remaining 10%
transported by rail, air, and inland water ways(www.purolatorinternational.com). The Pakistani
government has made large expenditures in the growth of the transport industry in recent years,
building new highways and roads, renovating old infrastructure, and updating the fleet of
vehicles. Along with helping to create new jobs, these investments have enhanced the transport
network’s dependability and efficiency.it is the major source of employment and almost 15% of
total workforce employed in the sector.
In the past, transportation was done in a very traditional way, it reflect the past economic
development and changed transport dynamics. traditionally goods were transported through
manual labour and rudimentary modes of transportation .In the mid-20 century there was a
significant shift the goods transportation landscape .when new Japanese vehicles did not exist,
goods were transported on eight-wheeler trucks and ten-wheeler Hino vehicles with a certain
weight ratio. There was no check balance for the payment of special taxes. There was no
motorway and the transporters were living on the same dilapidated roads .however the historical
challenges include the lack of standardization practices, and regulatory policies and inadequate
infrastructure Unlike the old and traditional vehicles, the drivers had to face great difficulty in
driving and there were no special benefits and policies from the government and there was no
union to raise voice in favour of the drivers.
But in this modern age, new vehicles are being introduced with modern technology and the work
of goods transportation is also increasing from time to time, due to the increase in import and
export, many people are turning to the transport business. New policies are being made and the
network of motorways is being laid to get maximum benefits. Earlier there was no weight
restriction on vehicles but now the weight of the vehicle has been restricted based on wheels.
And each vehicle can carry up to a specific ton of weight according to its own calculation.
Driving vehicles has become easy in modern way and drivers are given license by the
government without which it is a crime to drive a vehicle. It has been observed that drivers can
drive any vehicle according to the license such as LTV, HTV and PSV People with LTV drive
small cars, people with HTV drive big vehicles and buses with PSV.
The future of transport can be very bright but due to some reasons the pressure of transporter in
the market is going to be very less and the transporters are facing many problems in recent times
various factors are affecting the transport system very badly. I am highlighting those issues of
transport that have already written in abstract. As the country continues to experience economic
growth and urbanization the demand for various transportation of goods expected to rise The
transport sector is slowly losing its credibility. In the coming times automatic and electric
vehicles are being given existence and the future can prove to be good or bad because if the
problems related to transport in recent times are not considered then the transport sector may
suffer from various problems and People connected with it may also face problems .unravelling
and addressing regulatory hurdles in Pakistan goods transportation is key for more competitive
market.
Logistic Transportation Comparison: A brief contrast between Pakistan and
India
There are almost 263777km roadways (2019) in Pakistan while 4699024km in India.
Major Sea Ports are Karachi which is port Muhammad Bin Qasim LNG(liquid and natural gas)terminal is
Port Qasim .While in India major sea ports are Chennai Jawaharlal Nehru port Kolkata Mumbai sikka and
Visakhapatnam and LNG Terminal are Dabhol, Hazira and Dehaj. There are 151 airports in Pakistan
while there are 346 Airports in India, (www. indexmundi.com)
There are almost 21181km expressway length in India while 711km only in Pakistan ,and 1m of
motorway per square km length and 11.86 m in Pakistan. Motorway length in Pakistan is 2225 km while
in India there is only 1208 km length. Gross value of India added transport storage and communication
per capita is 97.5 while in Pakistan is 117.4(20 % more than India) .Container port traffic of India is 4.94
million TEU (more than 4 time Pakistan) 1.39 in Pakistan. Quality of port infrastructure WEF is 4 ranked
80 and in Pakistan is 4.4(more than 10% from India). Container port traffic per 1000 is 4.38 TEU and in
th

Pakistan is 8.8 TEU ranked is 56 (twice as much as India).There are 1.52 million km highway which are
th

14 time more than Pakistan and in Pakistan 109396km only. The most important thing is Logistics
performance index is 0.00249 and logistic performance in the Pakistan is 0.0158 which is 6 time more
than India and overall ranked is 147th. And if we talk about competency and quality of logistic service so
according to this logistic performance Indus of India is 3.14 which is 13 times more than Pakistan and
Pakistan is only 2.77. Container port traffic off India is 6.62 million which is 3 times more than Pakistan
while in Pakistan is 1.94 million. (www.nationmaster.com)
Country LPI(logisti LPI Custom Infra- Internation Logistics Trackin Time
c Ran s structur al competenc g -
perception k e Shipments e & line
index) Tracing
Score
Pakista 2.42 122 2.12 2.20 2.63 2.59 2.27 2.66
n
India 3.18 44 2.96 2.91 3.21 3.13 3.32 3.50
Sirilank 2.6 94 2.58 2.49 2.51 2.42 2.79 2.79
a
Bangla- 2.58 100 2.30 2.39 2.56 2.48 2.79 2.92
desh
www.nationmaster.com
Literature Review:
According to Atif, M., Shahbaz, M., & Haroon, M. (2019) the logistics
industry is essential for moving and storing goods, with various players like freight forwarders,
transport operators, and customs brokers working together. This sector contributes significantly
to employment and supports skilled workers, benefiting both the economy and businesses. The
importance of logistics in a country's GDP varies, with some nations relying heavily on it. The
pandemic has reshaped global logistics, emphasizing efficiency. In places like Pakistan, there are
challenges in improving logistics, impacting competitiveness. Enhancing logistics is crucial for a
country's success, protecting its strengths, and supporting rural economies. Overcoming
challenges, such as transportation and supply chain issues, is essential for improvement.
Logistics is super important for a country like Pakistan, contributing 15.6% to its economy and
providing jobs for 5.4% of its people. It helps the country connect globally and supports trade
growth. Improving logistics can make Pakistani products more competitive internationally. The
government is investing in infrastructure, but there are challenges like outdated systems and
bureaucracy. To boost the logistics sector, services like testing labs and inspection certification
are needed, and small businesses in the industry face obstacles that need government support.
Overall, making logistics more efficient is crucial for Pakistan's economic growth and global
competitiveness.

According to Shaiq, D. M., & Hassan, M. (2019) talks about how technology has made global
trade grow quickly, but it also made competition tougher. Businesses now want to be better than
others. They often outsource non-core tasks, like logistics services, to focus on what they do
best. This research looks at the perspective of companies providing these services in Pakistan,
facing challenges like poor infrastructure and uncertain economic conditions. The main questions
are about how the 3PL market in Pakistan compares globally and what factors affect the growth
of logistics outsourcing in Pakistan. The review explains the importance of outsourcing in simple
terms, emphasizing how it helps companies focus on what they're good at. World Bank logistics
Performance index (lPi) the international bank for reconstruction and development and the
international trade unit of the World Bank, based on an international survey of all exporting and
importing countries, calculate LPI and rank all countries by their logistics performance. It was
started in 2007, and since then five surveys have been carried out which are published in report
form. According to the survey, Pakistan stands 68th out of 160 countries (Arvis et al., 2016).

The challenges faced by Small and Medium Enterprises (SMEs) in Pakistan, highlighting the
historical neglect they experienced compared to large corporations. Major issues include limited
access to formal financing, lack of tangible and intangible resources, and reliance on personal
finances. The decline in SME financing is noted, impacting their growth and development.
Barriers such as insufficient funds, outdated facilities, and a lack of skilled manpower are
identified. The proposed approach suggests addressing internal process issues, providing
management training, upgrading technology, promoting exports, focusing on research and
development, and improving infrastructure. The role of the government and SMEDA (Small and
Medium Enterprises Development Authority) is emphasized in facilitating these changes to boost
the SME sector in Pakistan. (Madiha Shafique Dar, Shakoor Ahmed and Abdul Razzaq).

Pakistan's goods transportation sector plays a crucial role in facilitating trade and commerce,
ensuring the seamless movement of goods across the country. It encompasses a diverse range of
transportation modes, including road, rail, air, and sea, each with its unique advantages and
suitability for different types of cargo and distances. As Pakistan's economy continues to grow,
the demand for efficient and reliable goods transportation services is expected to increase
significantly Road transportation stands as the backbone of Pakistan's goods movement,
accounting for over 90% of freight movement. This dominance is attributed to the country's
extensive road network, spanning over 225,000 kilometers. Trucks, the workhorses of the road
transport industry, carry a wide range of goods, from food items and industrial raw materials to
agricultural produce and consumer goods. (Khan, M. A., & Khan, N. A. (2022).

Hypothesis:-
 Regulatory challenges including licensing, Smuggling of Iranian diesel and entry of
NLC’s (National Logistic Cell) into private sectors are causing major changes in logistic
transport in Pakistan, adversely market competition and GOVT revenue.

Research objective:-

1. To examine root causes of regulatory challenges of logistic transportation of Pakistan.

2. Aim to convince the government to bring modern policies in logistic transport.
3. To identify the importance that how Logistic Transportation is playing its role in the
country.

Research methodology:-
Quantitative method is used to conduct research through survey and mixed interview and analyze
numerical data related to regulatory challenges in goods transportation. The population under
study comprises stakeholders in the goods transportation sector in Pakistan, including transport
companies, drivers and related entities. Employed a purposive sampling method to select a
representative sample from the population. The data is collected on a specific period . In this
research on regulatory challenges impacting marketing competition in the goods transportation sector in
Pakistan, a comprehensive and nuanced understanding was sought through semi-structured interviews and a
meticulously developed survey questionnaire consisting of 17 questions in Urdu. The diverse participant pool
included transport company executives, fleet managers, frontline drivers, regulatory officials, and industry
experts, ensuring representation across organizational levels. The survey, employing a Liker scale, focused on
key issues such as Iranian diesel smuggling, the National Logistic Cell's involvement, police mafia influence,
and licensing challenges. The questionnaire, designed for clarity and relevance, underwent pilot testing to
enhance reliability. Data collection methods involved electronic and paper surveys distributed widely,
supplemented by face-to-face interviews for individuals with limited literacy or technological familiarity. The
10-day survey duration was efficiently managed, and participant confidentiality and voluntary engagement
were emphasized to maintain ethical standards. This methodological approach aimed to capture the
multifaceted nature of regulatory challenges and provide meaningful insights for policymakers and
stakeholders in the goods transportation sector.

Result analysis and Discussion;-

The survey results paint a complex picture of the goods transportation sector in Pakistan, highlighting
both significant challenges and promising opportunities for improvement. Let's delve deeper into the key
findings:
1. The Shadow of Smuggling:
A significant 85% identify Iranian diesel smuggling as a major challenge in Pakistan’s goods
transportation. Iranian diesel smuggling emerges as a major concern, with a staggering 77% of
respondents agreeing it adversely affects vehicle fitness and market competition. This unfair advantage
disrupts the level playing field and poses environmental risks.
 The survey further reveals a worrying trend of lost government revenue due to rampant smuggling (84%
agree). This raises critical questions about the effectiveness of border control and enforcement
mechanisms.80% assert that the entire logistics transport heavily relies on the lower prices of Iranian
diesel.
2. A Climate of Fear and Insecurity:
Extortion by individuals posing as police creates an environment of fear for transporters (63%
agree/strongly agree). This not only impacts drivers' well-being but also potentially inflates transport
costs and hinders efficiency.
64% feel that extortion activities by individuals posing as police create fear and insecurity for goods
transporters.

3. Undervaluation and Recognition:

The undervaluation of the profession is evident, with 72% agreeing that the sector lacks respect. This
translates into low driver morale, high staff turnover, and potential safety concerns.
A significant 54% of respondents feel that drivers' contributions to the economy and society are not
adequately recognized, further highlighting the need for a shift in public perception.
53% acknowledge that drivers often feel their contributions to the economy and society are not
adequately recognized.
4. A Call for Awareness and Education:

There is a strong demand for increased awareness and education about the importance of goods
transportation (68% agree/strongly agree). This suggests a need to bridge the gap between public
understanding and the sector's vital role in everyday life.
5.NLC Involvement Impact:
75% express concern that NLC’s interference hampers government revenue growth through taxes.
Over 68% perceive NLC as affecting fair resource distribution among private sector actors in goods
transportation.
About 72% believe NLC’s involvement in private sectors reduces business competition for other logistics
companies.
Approximately 69% worry about the potential decline of small transport enterprises due to NLC
contracts.
Licensing and Permitting Challenges:
Over 80% acknowledge licensing and permitting issues as significant regulatory challenges in goods
transportation.
Nearly 75% find initial testing challenging for drivers considering their education in Pakistan’s logistics
transport.
 Graph
120

100
16
28 32
80 37

60

40 84
72 68
63
20

0
The Shadow of A Climate of Fear and Undervaluation and Licensing and Permitting
Smuggling Insecurity Recognition Challenges

agree disagree Column1

Policy Recommendation;-
1. Smuggling: Leveling the Playing Field:

 Strengthen Border Control: Invest in technology, training, and inter-agency cooperation.

 Fuel Regulatory Measures: Introduce subsidized domestic fuel alternatives and enforce
stricter regulations.
 Transparency and Accountability: Ensure transparent revenue collection and fair
competition benefits.

2. Safety and Security: Fostering a Secure Environment:

 Law Enforcement Collaboration: Establish joint task forces to combat extortion by fake
officials.
 Driver Training and Awareness: Equip drivers with skills to identify and report extortion
attempts.
 Technology Solutions: Utilize GPS tracking and real-time communication tools for truck
monitoring.

3. Respect and Recognition: Building a Valued Profession:

  Public Awareness Campaigns: Highlight the vital role of goods transportation through
media campaigns.
 Educational Integration: Incorporate the sector's importance into school curriculums.
 Driver Welfare Initiatives: Advocate for improved working conditions, fair wages, and
healthcare.
 Driver Recognition Programs: Establish awards for exemplary drivers, boosting morale.

4. Empowerment and Engagement: Building a Collaborative Future:

 Driver Representative Bodies: Facilitate formal driver associations or unions.

 Skill Development and Certification: Offer training programs to upgrade driver skills.
 Technology Adoption: Promote digital tools for route optimization and logistics
management.

5. Monitoring and Evaluation: Ensuring Continuous Improvement:

 Establish a robust monitoring and evaluation system.

 Encourage data-driven decision-making for continuous improvement.
 Foster ongoing dialogue and collaboration between stakeholders.

By implementing these recommendations, Pakistan aims to transform the goods transportation

sector, addressing challenges and fostering a culture of collaboration, transparency, and
continuous improvement for national progress and economic prosperity.
NLC involvement resolving

• Clearly define NLC's role in private sectors to ensure transparency and fair competition.
• Implement tax reforms for increased government revenue without hindering private
logistics companies.
• Develop mechanisms for fair resource distribution among private sector actors in goods
transportation.
• Introduce programs to support small transport enterprises affected by NLC contracts with
major companies.
• Establish a regular review process for NLC contracts to prevent disadvantages for smaller
players.
• Foster collaboration between the government, NLC, and private logistics companies to
address concerns collectively.
• Conduct regular assessments of the logistics industry to identify and address evolving
challenges.
Conclusion:-
Pakistan’s goods transportation sector is crucial for economic growth. The
identified challenges, like complex regulations and Iranian diesel smuggling, require targeted
solutions.To level the playing field, the government should strengthen border control and
implement fuel regulatory measures. Transparency in revenue collection will ensure fair
competition. Safety measures, such as collaboration with law enforcement and driver training,
will create a secure environment. the contributions of drivers through public awareness and
educational initiatives is essential. Empowering stakeholders through representative bodies and
technology adoption can lead to a collaborative future. Monitoring and evaluation mechanisms
will facilitate continuous improvement. Addressing NLC involvement involves clear roles, tax
reforms, fair resource distribution, and support programs for affected small enterprises.
Collaboration between the government, NLC, and private companies is vital .Implementing these
recommendations will not only overcome challenges but also contribute to the growth and
competitiveness of Pakistan’s goods transportation sector, benefiting businesses, consumers, and
the overall economy.

References:
Atif, M., Shahbaz, M., & Haroon, M. (2019). Logistics performance and economic growth in
Pakistan: An empirical analysis. The Pakistan Development Review, 58(4), 787-804.
Shaiq, D. M., & Hassan, M. (2019). FACTORS AFFECTING GROWTH OF LOGISTICS
OUTSOURCING: A PERSPECTIVE OF THIRDPARTY LOGISTICS PROVIDERS IN PAKISTAN. Journal of
Business Strategies, 13(1), 143-160. Retrieved
from http://www.greenwichjournals.com/index.php/businessstudies/article/view/328.
Madiha Shafique Dar, Shakoor Ahmed, Abdul Raziq Pakistan Business Review 19 (1), 46-70,
2017.
Khan, M. A., & Khan, N. A. (2022). A Review of Road Transportation in Pakistan: Challenges and
Future Directions. Journal of Transportation Research, 11(2), 158-17
www.nationmaster.com
Pakistan Logistics Fright Movement
www.indexmundi.com

World Bank (www.worldbnk.com) ,

Appendix

S. Questions Strong Agree% Neutral Strong Disagree

R Agree % disagree% %
%
1 Licensing and 44 35 12 5 2
permitting issues
 contribute to the
regulatory challenges
in Logistic
Transportation in
Pakistan.
2 The initial testing is 45.7 28.6 16 0.5 6
difficult for drivers to
consider their
education in Pakistan
logistic transport.
3 The involvement of 41.1 31.1 15.2 3.8 8.6
NLC (National
logistic cell) in
private sectors is
reducing business for
others logistic
transport companies
4 Due to NLC’s 35.2 40 17.1 1 6.7
interference in
private sectors
GOVT’s revenue is
not increasing in the
forms of taxes
5 NLC impact the fair 37.1 31.5 19 1.9 9.5
distribution of
resources among the
private sectors actor
in goods
transportation.
6 Small transport 38.1 30.5 16.2 5.8 10.5
enterprises is going to
be an end due to NLC
contract with major
companies in
Pakistan’s ports and
exports companies.
7 Iranian diesel 46.7 31.4 12.5 7.6 1.9
smuggling create
significant challenges
to the regulatory
framework in goods
transportation in
Pakistan.
,8 Iranian diesel 32.4 46.7 13.3 1.9 4.8
smuggling is
adversely affecting in
vehicle fitness as well
as overall market
competition.
9 .Drivers feel 47.6 18.1 18.1 8.6 7.6
compelled to pay
extortion fees to
ensure the safety of
their goods and
themselves during
 transportation due to
the influence of
police mafia.
10 The presence of 48.3 20 14.3 8.6 8.6
police mafia on roads
significantly
contributes to an
increase in
transportation costs
for goods.
11 Extortion activities 41.9 21 21 10.1 5.6
by individuals posing
as police create an
environment of fear
and insecurity for
goods transporters in
Pakistan
12 The profession of 40 25.7 13.3 14.3 6.1
goods transportation
is generally
undervalued, leading
to a lack of respect
for drivers.
13 There is a need for 45.7 21.9 15.2 7.6 9.5
increased awareness
and education to
foster respect for the
goods transportation
profession among the
general public.